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IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


1.0 


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12.2 


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i.25    II  L4    III  1.6 

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D 


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Couverture  endommagte 


Covers  restored  and/or  laminated/ 
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|~n    Cover  title  missing/ 


Le  titre  de  couverture  manque 


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I      I    Showthrough/ 


Transparence 

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Qualiti  in6gale  de  I'impression 

Includes  supplementary  materia 
Comprend  du  materiel  suppl^mentaire 


I      I    Quality  of  print  varies/ 

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Lorsque  le  document  est  trop  grand  pour  Atre 
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et  de  haut  en  bas,  en  prenant  le  noribre 
d'images  nAcessaire.  Les  diagrammes  suivants 
illustrent  la  mAthode. 


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NATION  M,    riBRARY 

C   \  N  A  I)  A 

BIBI.iOt  II  ij.  i:   NAITONAIJB 


THE  CANADIAN  RAILROAD  QUESTION. 


ARGUMENTS  AND  FACTS 


SUBMITTED  TO 


A  committep:  of  the  united  states  senate, 


HY 


E.  W.  MEDDAUGH,  Esq., 


AM) 


A.  C.  RAYMOND,  Esq.,  . 


AT    A    HH:ARING    in    DETROIT,    MICHIGAN. 


May  I,  189T. 


DETROIT: 

Jiihn  K.  Eby  &  Co.,  Printers,  65  West  ConRress  Street. 
iSiji. 


^) 


1- 


P-fc^^' 


THE  CANADIAN  RAILROAD  QUESTION. 


ARGUMENTS  AND  FACTS 


SUBMITTED  TO 


A  COMMITTEE  OF  THE  UNITED  STATES  SENATE, 


BY 


E.  W.  MEDDAUGH,  Esq., 


AM) 


A.  C.  RAYMOND,  Esq., 


AT    A    HEARING    IN    DETROIT,    MICHIGAN, 


May  I,  1891. 


i 


DETROIT: 

John  F.  Eby  &  Co.,  Printers,  65  West  Congress  Street. 
1891. 


THE  CANADIAN  RAILROAD  QUESTION 


ARGUMENT  OF  E.  W.  MEDDAUGH. 

The  interests  of  Detroit  and  the  State  of  Michigan  in  the 
subject-matter  of  your  committee's  inquiry  is  very  great. 
Tiiis  city  and  State  are  peculiarly  situated.  On  the  east  we 
have  Canada  and  the  intervening  boundary  waters  between 
Canada  and  the  United  States.  Our  only  way  of  ingress  and 
egress  from  and  to  the  east  by  railway,  save  through  Canada, 
is  via  Toledo,  around  Lake  Erie. 

The  distance  between  Detroit  and  Buffalo  by  this  route, 
is  361  miles. 

The  distance  between  Detroit  and  Buffalo  by  the  Grand 
Trunk  Railway  through  Canada,  is  259  miles. 

This  is  a  difference  in  favor  of  the  Canadian  route  for 
Detroit,  and  for  all  Michigan  lying  north  of  Detroit,  of 
over  100  miles. 

The  distance  between  Port  Huron  and  Buffalo  by  the  Cana- 
dian route  is  198  miles.  This  route  can  accommodate  a  large 
section  of  the  State  lying  north  of  Detroit.  If  this  section 
of  the  State  were  compelled  to  seek  an  outlet  east  by  way  of 
Toledo,  the  mileage  for  it  would  be  :  Toledo  to  Buffalo,  296 
miles  ;  Detroit  to  Toledo,  6-i  miles  ;  Port  Huron  to  Detroit, 
63  miles ;  making  a  total  of  423  miles,  as  against  the  route 
through  Canada  of  198  miles. 

"What  any  obstruction  of  these  Canadian  routes  would 
mean  for  Michigan,  sufficiently  appears  in  what  I  have 
said. 

The  Upper  Peninsula  of  the  State  has  its  route  east  across 


■ 


tho  Sault  river.  Shall  this  lie  closed?  Must  that  section 
and  the  entire  northwest  he  sncriHcod  to  accoinniodato 
American  trunk  line  routes  south  of  Lake  Erie? 

New  England,  too,  is  interested  largely  in  this  question. 

Millions  of  money  have  hcen  invested  in  American  rail- 
ways in  New  England  and  the  west,  which  have  Ween  con- 
structed with  express  reference  to  connection  with  the  Cana- 
dian railways,  as  routes  for  through  trathc  between  the 
States.  Are  these,  too,  to  he  sacrificed  for  the  benefit  and 
at  the  beck  of  the  American  trunk  line  roads  i  The  build- 
ing of  these  connecting  roads  in  the  United  States  luis  been 
induced,  in  part,  by  the  establi^liod  policy  of  tho  govern- 
ment of  the  United  States,  as  expressed  in  its  laws  and  in 
treaty  with  Great  Britain,  favorable  to  transportation 
through  Canada. 

In  addition  to  the  shipping  interests  of  the  United  States, 
immediately  on  the  line  of  of  these  roads  connecting  with 
the  Canadian  roads,  which  would  bo  seriously  prejudiced  by 
any  obstruction  to  the  Canadian  route,  there  is  the  interest 
of  the  general  public  by  all  routes.  There  can  bo  no  doubt 
in  the  minds  of  intelligent  people  of  the  value  of  the 
Canadian  roads  as  moderators  of  both  freight  and  passenger 
rates  for  tratiic  between  the  east  and  the  west.  It  is  idle  to 
say,  as  has  been  said  by  some  of  the  American  trunk  line 
gentlemen,  that  the  closing  of  the  Canadian  routes  would 
not  result  in  higher  rates.  Competition  does  its  work  in  the 
carrying  business,  as  in  all  other  business.  We  have  only  to 
observe  what  the  effect  is,  on  railroad  rates,  of  the  opening 
of  navigation  each  year,  to  get  an  idea  of  tho  result  that 
would  follow  the  shutting  out  of  the  Canadian  routes  from 
competition  with  American  roads.  The  nominal  reason 
urged  for  Congressional  interference  with  this  Canadian 
railway  transportation  is  the  alleged  necessity  for  more 
thoroughly  subjecting  the  Canadian  roads  to  the  Interstate 
Commerce  law.    There  are  two  distinct   grounds  of  this 


i 


8Up|>o8c><l  ncucMity :  Ut,  that  tliu  Cuimilian  companies  liavo 
an  iulvantaj^o  over  thoir  American  cumpotitora  in  nut  licin^ 
bonnd  by  tlio  lun^  and  short  liaul  chiuso  of  the  act ;  and  2d, 
that  Ixiing  foreign  corporations,  the  Canadian  companies  are 
notamcnable  to  process,  etc.,  issued  from  our  courts  or  from 
the  Commission. 

As  to  the  first  point:  In  respect  of  all  llnitcd  States  traf> 
flc  through  Canada,  and  all  traffic  between  the  United  States 
and  Canada,  and  all  ocean  tratHc  to  and  fron)  the  United 
{States  passinj;^  through  Canadian  Atlantic  ports,  the  law  is 
regarded  by  the  Canadian  carriers  as  applying  ;  and  it  is 
observed  in  every  particular  quite  as  fully  as  it  is  by  the 
American  trunk  lino  roads.  Schedides  of  all  rates,  etc.,  on 
this  traffic  are  regularly  tiled  with  the  Commission,  thus 
recognizing  the  law's  applicability  and  requirements.  These 
schedules  speak  for  themselves.  Not  a  pound  of  freight  nor 
a  single  passenger  coming  under  either  of  these  classes  of 
traffic,  IS  carried  by  the  Canadian  carrier  except  in  connec- 
tion with  an  American  carrier  at  the  Canadian  frontier 
point.  A  through  line  of  railway  (composed  of  the  Canadian 
carrier  and  one  or  more  connecting  American  roads)  exists 
in  connection  with  this  traffic,  as  in  the  case  of  American 
trunk  lines.  These  lines  are,  in  fact,  really  American  trunk 
lines  with  the  others,  oidy  with  the  diilerence  that  they  have 
a  Canadian  cori)oration  as  one  of  the  links  in  the  chain. 

It  is  evident  that  this  traffic — any  part  of  it  in  fact — could 
not  be  successfully  carried  by  the  Canadian  railroads,  under 
the  existing  methods  of  railway  transportation  (with,  per- 
haps, the  exception  of  the  comparatively  small  tratiic  lietwccn 
the  United  States  anil  Canada,  embracing  the  trade  simply 
between  the  two  countries),  without  this  co-operation  of  the 
connecting  American  roads.  And  we  know,  as  a  fact,  that 
the  great  mass  of  even  this  excepted  traffic  is  carried  over 
American  roads  on  through  bills  under  arrangement  for 
continuous  transportation. 


0 


Now  it  is  ovulent  to  any  ono  who  is  fniniliar  with  tho 
mnnnor  in  whicli  freight  traffic  is  shipped  and  carried,  that 
it  is  not  possible  for  the  Canadian  carrier  to  indulge  in  any 
practice  in  disregard  of  the  requirements  of  the  Interstate 
Commerce  Law  without  the  co-operation  of  its  American 
connection,  except  in  one  particular  to  be  hereafter  noticed. 
AH  traffic  between  United  States  points  that  is  carried 
through  Canada  originates  with  an  American  road,  and  tho 
contract  of  carriage  is  made  by  it.  If  rates  are  not  main- 
tained up  to  tho  schedule  standard,  the  American  carrier  is 
guilty  ;  and  this  is  equally  true  of  all  export  traffic  from  the 
United  States  via  the  Canadian  seaports,  and  of  traffic  car- 
ried through  Canada  to  any  of  the  Atlantic  ports,  as  Boston 
or  Portland. 

The  possible  method  to  which  I  have  referred  of  tho 
Canadian  carrier's  violating  the  law,  without  the  guilty 
co-operation  of  its  American  connecting  carrier,  in  the 
transportation  ot  traffic  through  Canada,  is  by  the  paying  of 
rebates  to  the  shipper.  It  is,  no  doubt,  possible  for  the  Cana- 
dian carrier,  being  one  railway  in  a  through  line,  to  do 
this  to  some  extent.  But  it  is  equally  possible  for  any 
American  railway  company  that  is  part  of  ono  of  the  through 
trunk  lines  to  do  the  same  thing  to  an  equal  extent.  Tho 
opportunities  and  facilities  are  the  same  in  both  cases  ;  and 
the  chances  of  detection  are  equal. 

To  make  the  payment  of  rebates  a  success  in  procuring 
traffic,  while  rates  continue  as  low  as  they  have  been  for  the 
last  two  years,  and  still  are,  all  the  carriers  in  aline  would 
have  to  sluire  in  it.  No  one  of  them  alone  could  afford  to 
pay  it. 

The  long  and  short  haul  clause  of  the  act  is  strictly  com- 
plied with  by  the  company  I  represent,  as  I  presume  it  is 
by  the  Canadian  Pacific  Company.  The  schedules  of  rates 
covering  all  of  this  traffic  are  regularly  flled  with  the  Inter- 
state Commerce  Commission.     They  remain  there,  open  and 


subject  to  inipection,  not  only  of  tlie  Coininissioners,  bnt  of 
the  public.  No  complaint  io  haurd  that  tlicso  schedule  rates 
are  not  made  in  strict  regard  of  the  long  and  short  haul  pro- 
vision of  the  law.  And  r.  specilic  charge  is  made  against 
the  Canadian  roads  of  making  rates  at  variance  with  the 
schedules  filed.  Is  it  unreasonable  to  ask,  in  these  circum* 
stances,  that  this  ground  of  complaint  bo  treated  as  frivolous  ? 
General  chargos  of  this  character  are  easy  to  make  against 
the  Canadian  routes,  and  they  have  been  poured  into  the 
ears  of  meml)ers  of  Congress  and  of  tho  public  continually 
for  three  years  past,  but  no  fact  in  support  of  fhem  has  been 
stated.  We  have  the  right  to  demand  that  thuse  who  have 
been  so  persistently  ifiaking  and  publishing  the  charges  now 
produce  some  evidence  in  support  of  thc'r  truth,  or  Iience- 
fortli  refrain  from  this  cheap  method  of  warfare  against 
these  railroad  routes. 

But  it  has  been  said,  in  connection  with  this  charge,  that 
the  Canadian  roads  are  exempt  from  this  clause  of  the  uct.  m 
respect  to  their  local  Canadian  traflic — that  is,  trafHc  between 
points  in  Canada — and  that  they  have  an  advantage  over  the 
American  roads  in  this.  The  Interstate  Commerce  law,  of 
course,  does  not  affect  the  purely  internal  traffic  of  the 
Canadian  roads.  Neither  does  it  affect  tho  internal  State 
traffic  of  the  American  trunk  line  roads.  In  this  respect 
the  Canadian  and  American  roads  stand  on  equal  footing. 
For  instance,  the  New  York  Central  Kailroad,  with  its 
several  hundred  miles  of  road  within  the  State  of  New 
York,  and  an  exceptionally  valuable  local  State  traffic, 
ip,  in  respect  of  this  traffic,  entirely  independent  of  the  act 
of  Congress.  Neither  the  long  and  short  haul  clause  of 
the  law,  nor  any  other  provision  of  it,  applies  to  this  traffic  : 
and  the  Congress  has  no  power  to  make  it  apply.  The 
State  of  New  York  alone  can  legislate  concerning  this  traffic. 
And  this  is  true  of  the  purely  single  State  traffic  of  all 
American  railroads. 


• 

8 

It  would  8eein,  therefore,  that  the  privilege  of  the  Cana- 
dian roads  of  inalcing  rates  on  tlieir  local  Canadian  traHic 
without  regard  to  uur  law,  ought  not  to  cut  much  figure  in 
this  matter. 

Still  another  complaint  has  been  made.  It  has  been  said 
that  the  Canadian  railways  have  an  advantage  over  their 
American  competitors  in  being  able  to  recoup  their  losses  on 
unreasonably  low  through  rates  for  interstate  traffic,  by 
charging  the  Canadian  shipper  corres|)ondingly  higher  rates 
on  local  Canadian  traffic.  The  Interstate  Commerce  Com- 
mission lends  respectability  to  this  notion  by  a  reference  to 
it  in  one  of  its  annual  reports.     (2d  Annual  Report,  p.  69.) 

Could  anything  be  more  absurd  than  the  idea  that  our 
Canadian  ticighbors  would  submit  tu  be  taxed  in  this  way 
for  the  benefit  of  American  shippers,  even  if  the  Canadian 
carriers  were  disposed  to  do  it?  Hut,  aside  from  this,  I  am 
at  a  loss  to  see  what  motive  can  exist  for  the  Canadian  car- 
riers adopting  such  a  policy.  Revenue  is  the  object  of  its 
being.  If  what  it  loses  by  reduced  rates  on  through  traffic 
it  simply  makes  good  by  higher  local  rates  in  Canada,  it 
gains  nothing.  The  carrier  would  be  quite  as  well  off,  to 
say  the  least,  if  it  charged  higher  rates  on  through  business, 
and  did  loss  of  it,  while  maintaining  the  local  rates  up  to  the 
maximum  standard. 

IJut  the  same  conditions  exist  on  the  American  trunk 
lines.  Each  of  them  has  a  greater  or  less  extent  of  road 
exclusively  within  a  single  State,  wiiere  it  has  a  local  traffic 
not  amenable  to  the  act  of  Congress.  The  motive  equally 
exists  with  them  to  nuiko  a  high  local  tariff  of  charges  to 
compensate  them  for  losses  on  low  through  rates.  And  yet 
1  have  never  heard  of  their  doing  it. 

liut  it  is  a  little  strange  that  in  all  the  talk  on  this  subject, 
including  the  report  of  the  Commission  to  which  1  have 
referred,  there  has  bean  no  statement  of  how  the  local  rates 
of  the  Canadian  roads  compare  with  the  local  State  rates  of 


9 


he  Cana- 
iii  traffic 
figure  in 

jccn  said 
ver  their 
losses  on 
•affie,  by 
;her  rates 
I'ce  Coin- 
erence  to 
i-t,  p.  69.) 
I  that  our 
this  way 
Canadian 
;hi8,  I  am 
adian  car- 
jeet  of  its 
igh  traffic 
Janada,  it 
irell  off,  to 
I  business, 
5  up  to  the 

can  trunk 
nt  of  road 
ocal  traffic 
ve  equally 
charges  to 
And  yet 

lis  subject, 

ich  I  have 

local  rates 

ate  rates  of 


the  American  roads.  The  information  is  accessible.  The 
tariff  of  rates  on  all  these  roads  is  public,  and  could  be  readily 
obtained.  Since  the  report  of  the  Commission  to  which  I 
have  referred  was  published,  Mr.  A.  C.  Raymond  has  pro- 
cured the  local  State  tariffs  on  .several  roads  of  the  United 
States,  and  the  local  Canadian  tariffs  of  the  Canadian  roads, 
and  has  embodied  the  result  in  a  printed  argument,  which, 
I  l)clieve,  has  been  furnished  to  the  Interstate  Commerce 
Committee  of  the  Senate.  The  result  of  a  comparison  of 
his  figures  is  to  show  that  the  local  Canadian  rates  are  not 
higher  than  the  local  State  rates  of  the  American  railroads. 
This  ought  effectually  to  dispose  of  the  charge  that  the 
American  railroads  are  under  any  disadvantage  in  respect 
of  this  matter,  in  comparison  with  their  Canadian  competi- 
tors. 

What  the  outside  clamorers  for  additional  legislation 
respecting  the  Canadian  carriers  would  like,  and  hope  for, 
no  doubt,  is  a  law  that  will  enforce  upon  these  carriers,  as  a 
condition  of  their  engaging  in  the  business  of  interstate 
carrying,  a  strict  observance  of  the  long  and  short  haul 
clause  in  their  local  Canadian  traffic.  I  will  not  discuss  this. 
It  is  too  absurd  for  serious  consideration.  I  think,  however, 
that  I  may  oay  that  the  company  I  represent  will  voluntarily 
yield  to  such  terms,  whenever  they  are  imposed  on  the  other 
trunk  line  roads  in  respect  of  their  single  State  traffic.  To 
require  this  of  the  Canadian  roads,  while  l(!aving  the  Ameri 
can  roads  free  in  respect  of  their  single  State  business,  would 
be  a  cowardly  method  of  weighting  the  Canadian  carriers, 
unworthy  of  our  Congress.  If  it  shall  ever  be  deemed  good 
policy  to  cut  off  these  roads  from  competition  with  Ameri- 
can railroads,  let  the  purpose  be  openly  avowed,  and  let  the 
method  of  its  accomplishment  be  direct  and  manly,  instead 
of  indirect  and  under  false  pretenses. 

Now,  as  to  the  service  of  process  on  the  Caiuidian  roads, 
so  as  to  subject  them  to  the  jurisdiction  of  our  tribunals  in 
case  of  violations  of  the  law. 


10 

The  question  that  naturally  arises  is  whether  the  experi- 
ence of  the  last  four  years — the  period  since  the  law  was 
enacted — has  demonstrated  any  trouble  in  this  regard? 
There  can  be  but  one  answer  to  this.  The  American  rail- 
way companies  have  not  been  more  prompt  to  obey  any 
citation  from  the  Commission,  or  to  afford  information  when 
called  upon,  than  have  the  Canadian  companies.  In  no 
instance  have  these  Canadian  carriers  failed  to  submit  them- 
selves to  the  jurisdiction  of  the  Commission  in  plenary  pro- 
ceedings instituted  against  them ;  and  they  have  always 
given  the  Commission  full  information  and  opportunity  for 
investigation  of  their  methods,  etc.,  when  called  upon.  If 
my  memory  is  correct,  it  was  the  New  York  Central  ^Railroad 
Company — an  American  carrier,  and  not  a  Canadian — that 
refused  to  disclose  to  the  Commission  the  facts  respecting 
its  issue  of  passes. 

I  deny  that  experience  has  developed  necessity  for  addi- 
tional legislation  in  connection  with  this  point. 

If,  however,  in  spite  of  this  experience  as  to  the  sufficiency 
of  the  law  as  it  stands,  Congress,  out  of  deference  to  this 
theory,— or  for  any  better  reason,  if  one  exists, — concludes 
to  amend  the  law  so  as  to  meet  the  several  complaints  res- 
pecting the  Canadian  railroads,  I  suggest  that  the  amend- 
ments should  he  directed  to  the  alleged  evils,  instead  of  try- 
ing to  cripple  the  Canadian  roads. 

The  advocates  for  further  legislation  openly  profess  their 
object  to  be  the  subjection  of  the  Canadian  railroads  to  the 
Interstate  Commerce  law  as  completely  as  the  American 
railroads  are  subject  to  it — nothing  more.  No  fair-minded 
man  can  object  to  this.  And  while  I  protest  that  this  is  fully 
realized  under  the  law  now,  there  is  no  reason  why  additional 
legislation  should  not  be  had  in  the  same  direction,  if  any- 
body wants  it.  But  the  pending  bills  which  provide  that 
the  Canadian  carrier  shall  take  out  a  license  from  the  gov- 
ernment of  the  United  States  to  engage  in  carrying  interstate 


bhe  experi- 
le  law  was 
is    regard  ? 
lerican  rail- 
)  obey  any 
lation  when 
188.     In  no 
ibmit  tliem- 
plenary  pro- 
lave  always 
ortunity  for 
d  upon.     If 
tral  Railroad 
ladian — that 
ts  respecting 

sity  for  addi- 

le  sufficiency 
•ence  to  this 
5j — concludes 
unplaints  res- 
;  the  amend - 
nstead  of  try- 

'  profess  their 
lilroads  to  the 
he   American 
J  fair-minded 
lat  this  is  fully 
vhy  additional 
ection,  if  any- 
i  provide  that 
from  the  gov- 
ying  interstate 


11 


and  international  traffic,  and  that  this  license  shall  he  for- 
feited as  a  penalty  of  any  violation  of  the  law,  can  have  but 
one  purpose,  and  that  is  to  get  rid  of  the  Canadian  routes. 
I  hazard  nothing  in  the  statement  that  there  is  not  a  com- 
mon carrier  in  the  United  States  subject  to  the  Interstate 
Commerce  Act,  but  has  violated  the  act  repeatedly — some- 
times intentionally — and  often  through  ignorance.  This 
result  is  inevitable  in  a  system  of  business  as  extensive  as 
this  is,  and  which  involves  the  employment  of  such  a  large 
number  of  agents  in  its  traffic  department.  Most  of  these 
carriers  have  been  before  the  Commission  for  this  offense, 
and  some  of  them  many  times.  What  would  any  of  them 
say  to  a  proposition  to  make  forfeiture  of  their  right  to  con- 
tinue their  business  the  penalty  for  a  violation  of  the  law  ? 
Tiiey  would  probably  think  it  unduly  severe,  and  in  this  I 
agree  with  them.  Even  if  such  a  penalty  were  left  discre- 
tionary with  the  Commission,  it  would  be  objectionable,  as 
vesting  in  that  body  a  power  too  liable  to  abuse  under  the 
pressure  of  great  influence.  No  tribunal,  whether  judicial 
or  political,  should  be  clothed  with  such  power,  except 
where  every  other  remedy  has  proved  inadequate. 

I  have  to  say  generally,  in  respect  of  these  bills  and  of 
any  and  all  other  legislation  that  may  be  proposed,  that  the 
Grand  Trunk  Railway  Company  will  cheerfully  acquiesce 
in  and  comply  with  any  law  that  affects  all  these  interstate 
carriers  alike.  But  why  should  the  penalty  of  a  violation 
of  the  law  be  made  different  or  more  in  its  case  than  in  the 
case  of  the  New  York  Central  Railroad  Comnany  ?  If  for- 
feiture of  the  right  to  carry  is  necessary  and  proper  as  to 
the  one,  it  must  be  equally  so  as  to  the  other.  I  defy  any- 
one to  point  out  a  difference  between  them,  or  the  circum- 
stances that  will  justify  any  discrimination  in  respect  of  this 
matter. 

Neithei  the  license  nor  the  added  penalty  would  remove 
the  alleged  facility  of  the  carrier  in  Canada  for  disregarding 


I 


12 


the  law,  nor  would  either  aid  in  detecting  such  violations 
when  tliey  occur.  This  must  be  apparent  to  anyone.  And 
yet  tiie  opportunity  of  the  Canadian  roads  for  fraud  upon 
the  act,  and  the  difficulty  of  detecting  them  in  it,  was 
gravely  urged  by  the  gentleman  who  suggested  this  license 
legislation,  as  the  reason  for  it. 

If  it  is  simply  desired  to  place  the  Canadian  railway  com- 
panies in  the  same  position  as  the  carriers  in  the  States,  res- 
pecting the  service  of  process  on  then),  obedience  to  final 
orders,  etc. — whether  of  the  Commission  or  of  the  courts — 
and  all  inquisitorial  rights  with  which  the  Commission  is 
clothed,  here  is  an  opportunity  for  use  of  the  forfeiture 
power.  Amend  the  act  of  Congress  so  as  to  impose  a  pen- 
alty of  forfeiture  of  the  right  to  continue  the  interstate 
business,  upon  all  carriers  that  are  subject  to  the  act,  for 
failure  to  obey  process  served  upon  them,  whether  served 
within  the  United  States  or  in  an  adjacent  foreign  country, 
or  to  subject  themselves  to  the  jurisdiction  of  the  Commis- 
sion or  court  from  which  it  issues.  And  impose  a  like 
penalty  for  refusal  or  neglect  to  obey  final  orders  or  decrees, 
or  to  satisfy  final  judgment,  saving  always  the  right  of 
appeal ;  and  for  refusal  or  neglect  to  yield  to  the  Commis- 
sion in  the  exercise  of  its  inquisitorial  powers. 

If  the  American  railroad  gentlemen  are  honest  in  the 
profession  of  what  they  want  to  accomplish,  such  an  amend- 
ment of  the  law  will  be  satisfactory  to  them. 

One  of  the  bills  now  pending  in  Congress  requires  these 
Canadian  carriers  to  give  a  bond  to  the  United  States  gov- 
ernment for  obedience  to  the  law.  The  legislation  I  sug- 
gest would  be  much  more  effective  than  a  bond,  as  the 
remedy  would  be  direct  in  each  case  of  violation. 

But,  in  fairness,  the  law  should  apply  to  all  alike.  There 
is  no  excuse  for  making  in  this  matter  two  rules— one  for 
the  Canadian  roads,  and  a  different  one,  less  stringent,  for 
the  American  roads. 


frnn 


13 


h  violations 

yone.     And 

fraud  upon 

in   it,    was 

this  license 

railway  com- 
le  States,  res- 
ence  to  final 

the  courts — 
ommission  is 
,he  forfeiture 
impose  a  pon- 
tile interstate 
0  the  act,  for 
hether  served 
•eign  country, 
•  the  Commis- 
impose  a  like 
icrs  or  decrees, 

the   right  of 
»  the  Coinmis- 

honest  in  the 
5uch  an  aniend- 

requires  these 
;ed  States  gov- 
rislation  I  sug- 
,  bond,  as  the 
ition. 

11  alike.  There 
)  rules— one  for 
iS  stringent,  for 


If  the  only  interests  involved  were  those  of  the  trunk 
lino  railway  companies  south  of  Lake  Erie,  as  against  the 
Canadian  roads,  a  narrow  and  illiberal  national  policy  might 
favor  any  legislation  to  cripple  the  Caradian  roads.  But 
this  is  not  the  case.  There  are,  in  the  first  place,  large 
systems  of  railway  in  the  Ujiited  States,  representing  in  the 
cost  of  construction  a  great  many  millions  of  dollars,  the 
prosperity — indeed,  the  very  life  of  which — depends  upon 
the  uninterrupted  course  of  interstate  traffic  through 
Canada ;  and  the  Congress  of  the  United  States  is  bound 
not  to  do  anything,  save  from  national  necessity,  to  the 
injury  of  these  systems  of  railway ;  and  surely  the  desire 
of  these  trunk  line  roads  to  get  rid  of  Canadian  railway 
competition  can  hardly  form  the  basis  of  such  national  action. 
It  will  not  do  to  sacrifice  this  great  America:',  interest  for 
the  benefit  of  the  American  trunk  lino  railways. 

But  these  American  railway  interests,  which  are  so  inex- 
tricably bound  up  with  the  Canadian  roads,  are  not  all,  even 
if  they  are  the  greater,  American  interests  to  be  prejudi- 
cially affected  by  a  disturbance  of  the  Canadian  routes.  As 
I  have  already  intimated  in  the  opening  of  this  discussion, 
there  is  the  shipping  public  of  all  Now  England,  on  the 
east,  and  of  a  dozen  great  States  in  the  west  and  northwest. 
If  the  shippers  in  these  States — the  producer,  the  merchant 
and  the  manufacturer,  have  no  interest  in  this  question,  it 
is  pretty  evident  that  they  think  they  have.  For  they  have 
given  utterance  to  most  vigorous  protests,  within  the  last 
two  years,  through  boards  of  trade  and  other  commercial 
organizations,  against  any  action  by  our  government  that 
might  have  the  effect  to  impair  the  efficiency  of  these  Cana- 
dian routes  of  transportation  for  United  States  traffic.  It 
would  not  be  a  difficult  task,  I  believe,  to  show  that  they 
do  not  overestimate  the  value  of  these  routes  to  the  sections 
of  the  United  States  for  which  they  speak.  But  I  will  not 
occupy  time  for  this.     There  is  a  presumption  that  such 


14 


bodies  of  intelligent  American  citizens  are  the  best  judges 
of  their  own  interests  in  such  n  qnestion.  This  aspect  of 
it  can  be  safely  left  to  them. 

The  Grand  Trunk  Railway  is  one  section  only  of  a  great 
American  trunk  line  route  extending  from  Chicago  to  the 
Atlantic  seaboard  points  of  New  York,  Boston  and  Portland. 
Between  Chicago  and  New  York,  a  distance  by  its  route  of 
942  miles,  there  is  o?ily  190  miles  of  the  transportation  on 
Canadian  territory.  All  the  rest  is  in  the  United  States 
and  over  the  railroads  of  American  corporations.  Between 
Chicago  and  Boston,  a  distance  by  this  route  of  1184  miles, 
557  miles  of  the  transportation  is  in  Canada,  and  the 
remainder  is  in  the  United  States,  and  on  railroads  of 
American  corporations.  Between  Chicago  and  Portland, 
a  distance  of  1130  miles,  there  is  transp  >rtation  in  Canada 
of  050  miles,  and  the  remainder  is  in  the  Jnited  States,  and 
on  American  railroads. 

These  American  railroads,  profoundly  interested  in  the 
continuance  of  this  route  through  Canada  unembarrassed  by 
obstructive  legislation,  represent  in  the  aggregate  a  capital 
investment  of  $85,000,000. 

No  words  of  mine  can  add  anything  to  the  eloquent 
appeal  of  this  statement  against  the  kind  of  legislation  that 
Congress  has  been  asked  for  on  this  subject. 

The  Grand  Trunk  Railway  Company  has  another  Amer- 
ican feature  that  entitles  it  to  some  consideration.  It  has 
constructed  and  promoted  the  construction  of,  and  has  a 
very  large  pecuniary  interest  in,  more  than  1,000  miles  of 
railroad  in  the  United  States.  Its  cai)ital  investment  in 
these  railroads,  every  one  of  which  is  an  American  corpora- 
tion, amounts  to  many  millions  of  dollars. 

It  is  generally  well  known  that  the  established  method 
among  railway  companies  forming  a  continuous  line  for  car- 
rying freight  is  by  the  creation  of  what  is  known  as  fast 
freight  lines.     These  lines  are  established  by  agreement  of 


;i>. 


15 


best  judges 
lis  aspect  of 

y  of  a  great 
icago  to  the 
lul  Portland. 

its  route  of 

portation  on 

Jnited  States 

8.     Between 

)f  1184  miles, 

ada,  and   the 

railroads  of 
nd  Portland, 
ion  in  Canada 
ed  States,  and 

rested  in  the 
mbarrassed  by 
egate  a  capital 

the  eloquent 
legislation  that 

another  Amer- 
ration.  It  has 
of,  and  has  a 
1,000  miles  of 
investment  in 
erican  corpora - 

)lished  method 
)us  line  for  car- 
known  as  fast 
r  agreement  of 


■%t. 


t 


the  companies  composing  thorn,  each  contributing  its  quota 
of  cars,  on  an  agreed  basis,  for  use  in  the  business  of  the 
line.  It  shows  something  of  the  extent  of  the  Grand 
Trunk  Railway  Company's  traffic  arrangements  with  its 
American  railway  connections,  that  it  is  a  party  in  the  fol- 
lowing fast  freight  lines,  under  agreements  with  the  Amer- 
ican railway  companies  named : 

The  Micliigan  &  Milwaukee  Fast  Freight  Line,  in  con- 
nection with  the  New  York  Central  Railroad  Co. 

The  Commercial  Express  Line,  in  connection  with  the 
New  York,  Lake  Erie  *fe  Western  Railroad  Co. 

The  Iloosac  Tunnel  Line,  in  connection  with  the  "West 
Shore  &  Fitchburg  Railroads. 

The  Great  Eastern  Fast  Freight  Line,  in  connection  with 
the  Delaware,  Lackawanna  &  Western  Railroad  Co.  and 
the  Central  Vermont  Railroad  Co. 

The  Wabash  &  Lehigh  Valle}'  Fast  Freight  Line,  in  con- 
nection with  the  Lehigh  Valley  Railroad  Co. 

The  Ontario  Despatch  Line,  in  connection  with  the  New 
York,  Ontario  &  Western  Railroad  Co. 

The  National  Despatch  Line,  in  connection  with  the  Cen- 
tral Vermont  R.  R.,  and  its  connections  at  White  River 
Junction  for  New  England  points. 

This  company  has  also  a  through  passenger  service  in 
connection  with  the  AVest  Shore  Railroad  Co.,  of  which  the 
New  York  Central  Railroad  Co.  is  lessee,  and  with  the  New 
York,  Lake  Erie  &  Western  R.  R.  Co.  The  Grand 
Trunk  road  is,  in  fact,  the  recognized  and  established  west- 
tern  connection  of  the  West  Shore  road  for  both  passengers 
and  freight. 

No  one  familiar  with  the  railways  from  New  York  Cit}' 
centering  at  Buffalo,  will  fail  to  appreciate  at  once  what  the 
effect  would  be  upon  them,  if  they  were  deprived  of  the 
route  through  Canada  by  the  Grand  Trunk  road  as  a  feeder 
to  them  of  interstate  traffic.  The  New  York  Central  alone 
would  gain  by  it.     The  others  would  suffer  great  loss. 


16 


In  addition  to  all  its  railroad  investments  in  the  United 
States,  the  Grand  Trunk  Company  has  just  completed  the 
construction  of  an  international  railroad  tunnel  between 
Port  Huron  and  Sarnia,  under  the  River  St.  Clair,  at  a  cost 
of  about  $3,000,000.  Possibly,  however,  some  timid  souls 
in  the  United  States  may  sue  lurking  in  all  this  a  deep-laid 
plan  on  the  part  of  this  corporation,  in  co-operation  with  the 
Canadian  government,  to  afford  greater  facilities  to  the 
Canadian  government  for  moving  an  army  of  conquest 
against  us  from  that  country. 

In  the  face  of  these  facts,  is  it  not  apparent  that  any 
action  by  the  government  of  the  United  States  by  the 
imposition  of  burdens  on  the  Grand  Trunk  Railway  Com- 
pany in  connection  with  this  interstate  traffic,  that  are  not 
imposed  upon  the  exclusively  American  trunk  lines,  would 
result  in  a  serious  injury  to  other  large  American  railway 
interests,  and  to  the  interests  of  a  large  section  of  American 
producers,  merchants  and  manufacturers?  These  aggregate 
interests  are  much  too  large  and  important  to  be  sacrificed 
for  the  benefit  of  any  other  interest,  either  railway  or  sec- 
tional. 

There  are  many  other  considerations  which  have  a  bear- 
ing on  this  Canadian  railway  transportation  question,  that  I 
should  like  to  discuss,  and  only  refrain  from  discussing  them 
liere  for  fear  of  consuming  more  time  than  justly  belongs 
to  me,  and  possibly  trespassing  on  the  patience  of  the  com- 
mittee. 

The  demand  of  the  American  public  everywhere  is  con- 
tinually heard  in  all  sections  for  cheap  and  still  cheaper 
rates  of  transportation.  In  this  direction  lies  the  hope  for 
greater  prosperity  in  all  departments  of  business.  The  dif- 
ference of  a  few  cents  jn  a  hundred  in  the  transportation  of 
grain  from  the  rich  fields  of  its  production  in  the  west,  to 
the  Atlantic  seaboard,  determines  the  possibility  of  its  being 
profitably  marketed  abroad.     And  this  is  true  of  all  our 


the  United 
)inpletod  the 
incl  hetween 
lair,  at  a  cost 
Q  timid  Bouls 
lis  a  deep-laid 
ation  with  the 
silities  to  the 

of  conquest 

ent  that  any 
States  by  the 
Railway  Com- 
,  that  are  not 
k  lines,  would 
erican  railway 
in  of  American 
Miese  aggregate 

0  be  sacrificed 
railway  or  see- 
ch have  a  bear- 
question,  that  I 
discussing  thetn 

1  justly  belongs 
nee  of  the  com- 

ry where  is  con- 
nd  still  cheaper 
ies  the  hope  for 
liness.  The  dif- 
jransportation  of 
n  in  the  west,  to 
>ility  of  its  being 
true  of  all  our 


vast  surplus  of  production  of  every  kind.  The  United 
States,  therefore,  cannot  afford  to  close  any  route  now  open 
to  it  that  cheapens  the  rates  of  transportation  between  the 
places  of  production  and  the  market.  These  routes  through 
Canada  unquestionably  have  this  effect.  This  is  the  invari- 
able testimony  of  every  shipping  centre  tributary  to  t^'esf 
routes.  It  may,  with  equal  show  of  reason,  be  contended 
that  the  waterways  of  the  great  lakes  do  not  have  a  reduc- 
ing effect  on  rates,  during  the  season  of  navigation,  as  that 
these  Canadian  railway  routes  are  ineffective  in  this  respect. 


The  foregoing  is  the  substance  of  my  remarks  submitted 
to  the  special  committee  of  the  United  States  Senate. 
Messrs.  Henry  Russel  and  Ashley  Pond,  representing  the 
Michigan  Central  11.  R.  Co.,  followed  me  on  the  occasion. 
Reference  was  made  by  them  to  the  percentage  of  the  east 
bound  traffic  out  of  Chicago  taken  by  the  Canadian  rail 
routes,  which  was  claimed  to  be  excessive  as  against  the 
exclusively  American  routes;  and  the  inference  was  indulged 
in  and  urged  that  such  a  percentage  of  the  business  could 
only  be  secured  for  the  Canadian  routes  by  the  payment  of 
rebates.  And  the  alleged  difficulty  of  investigating  the 
Canadian  railway  companies  in  respect  of  such  rebate  i)a3'- 
ments  was  urged  as  a  reason  for  so  amending  the  law  as  to 
require  these  corporations  to  obtain  a  license  for  engaging 
in  interstate  traffic  and  imposing  a  forfeiture  of  the  license 
as  a  penalty  for  violations  of  the  law. 

Now,  if  these  gentlemen  honestly  believe  that  rebates  are 
being  so  paid,  they  owe  it  to  the  carrier  they  represent,  if 
not  to  the  public,  to  call  attention  of  the  Interstate  Com- 
merce Commission  to  the  fact,  and  ask  an  investigation.  * 
Why  do  they  not  try  this  method  of  redress,  instead  of  air- 
ing their  suspicions  before  a  Committee  of  the  Senate  ? 
Here  is  a  good  opportunity  to  demonstrate  any  defects  in 


i 


18 


the  law  and  the  alleged  practical  difticnlties  in  tlio  way  of 
an  otKcial  investigation  of  the  practices  of  the  Canadian 
railways.  Hnt  it  was  further  said  that  this  undno  percent- 
a^o  of  the  Chicago  traffic  taken  by  the  Canadian  roads  was 
mostly  confined  to  dressed  beef  shipments,  and  that  this 
enormous  business  is  in  the  hands  of  loss  than  half  a  dozen 
of  well-known  shippers  of  beef — which  is  a  fact;  and  it  was 
assumed  that  rebates  arc  being  paid  to  these  few  shippers. 
If  there  is  any  foundation  in  fact  for  this  assumption,  these 
shippers  are  cfjually  guilty,  under  the  law,  with  the  carrier 
that  pays  the  rebate;  and  they  should  be  punished.  What 
stands  in  the  way  of  an  investigation  of  this  subject  in 
respect  of  them  ?  They  are  all  American  residents,  and 
have  their  places  of  business  in  the  United  States.  Their 
account  books,  papers,  etc.,  can  be  examined.  They  arc 
amenable  to  process  from  the  Interstate  Commerce  Com- 
mission and  from  the  United  States  courts.  AVhy  have  not 
these  railway  gentlemen,  so  burdened  with  suspicions  of 
fraud,  promoted  a  judicial  inquiry  into  the  facts?  They 
have  not  the  poor  excuse  here,  that  they  offer  in  connection 
with  the  Canadian  railroads,  that  the  parties  arc  in  foreign 
territory. 

With  American  shippers  as  necessarily  guilty  parties  to 
any  alleged  system  of  rebate  payments  by  the  Canadian  car- 
riers, and  with  these  carriers  openly  declaring  their  willing- 
ness to  submit  theinselves,  and  all  books,  accounts,  papers, 
etc.,  to  the  inspection  of  the  Commission  or  court,  in  any 
proceeding  that  may  be  instituted  for  an  investigation  of 
the  facts,  the  gentlemen  who  make  these  gratuitous  charges, 
based  solely  on  their  suspicions,  in  neglecting  to  take  the 
responsibility  of  moving,  in  the  way  plainly  pointed  out  by 
the  law,  for  an  investigation,  lay  themselves  open  to  the 
grave  suspicion  of  not  really  believing  what  they  profess  to 
believe  in  this  matter. 

There  is  an  offensive  assumption  of  superior  virtue  on  the 


10 


ill  the  wiiy  of 
the  Ciinadian 
ulno  porcent- 
iaii  roads  was 
iiiul   that  this 
I  half  a  dozen 
ict ;  and  it  was 
few  siiippere. 
inption,  these 
til  the  carrier 
isiied.    What 
lis  8ni)jcct  in 
residents,   and 
States.    Their 
ed.     They  arc 
otnmerce  Com- 
AViiy  have  not 
suspicions  of 
3  facts?    They 
!r  in  connection 
8  are  in  foreign 

juilty  parties  to 
le  Canadian  car- 
ig  their  willing- 
ccountp,  papers, 
ov  court,  in  any 
investigation  of 
atnitous  charges, 
jting  to  take  the 
Y  pointed  out  by 
fos  open  to  the 
it  they  profess  to 

rior  virtue  on  the 


part  of  these  gcntloinen,  involved  in  their  charges  as  made 
against  these  carriers.  They  assume  that  the  Canadian  rail- 
way officers  and  traffic  agents  are  not  above  resorting  to 
devices  for  evading  the  law's  requirements,  which  are  equally 
open  to  anyone  of  the  railways  in  the  United  States,  but 
which  the  officers  and  agents  of  the  latter  are  morally  above 
having  recouree  to  as  a  meap^  of  securing  tniffic.  They 
would  experience  some  difficulty  I  think,  in  establishing 
this  as  a  fact  in  the  minds  of  Anicrican  shippers  who  have 
had  many  years  of  experience  in  shipping  by  the  ditferent 
routes.  "Comparisons  are  odious,"  but  the  officers  and  traf- 
fic agents  of  the  Canadian  railways  have  no  reason  to  shrink 
from  comparison  in  this  connection.  They  are  not  unknown 
to  the  commercial  men  in  the  United  States ;  and  I  do  not 
hesitfite  to  make  the  assertion  that,  taken  together,  they 
Btand  quite  as  high  for  manly  integrity  in  all  business  rela- 
tions as  the  officers  and  agents  of  any  American  railway  cor- 
poration. The  American  shipping  public  will  be  slow  to 
believe  that  these  Canadian  railway  companies,  in  order  to 
get  traffic,  have  resorted  to  methods  of  violating  the  law 
that  are  equally  open  to  the  officers  and  agent*  of  their 
American  competitors,  but  which  the  latter  have  proved  too 
honest  to  adopt. 

If  rebates  have  been  paid  for  traffic  by  the  Canadian  rail- 
ways, I  neither  know  nor  have  heard  of  any  instance  of  the 
kind.  The  point  I  made,  and  wish  here  to  en»i)basi/o,  is 
simply  that  it  is  no  more  liable  to  be  done  by  the  carriers  on 
these  routes  than  by  the  carriers  on  any  of  the  routes  cxcln- 
eively  within  the  United  States;  that  the  facilities  for 
doing  it  are  no  greater  by  the  one  route  than  by  the 
other ;  and  that  the  opportunities  for  detection  are  the 
same  by  all  routes.  Wiiatever  may  be  done  in  evasion 
of  the  law  by  the  Grand  Trunk  Railway  Co.,  for  instance, 
in  connection  with  any  traffic  it  may  carry — whether  it  be 
the  payment  of  rebates  or  anything  else — may  also  be  done. 


20 


and  with  no  greater  risk,  hy  any  one  of  the  trunk  line  rail- 
way companies  ;  and  furthermore,  ie  quite  as  liable,  to  Bay 
tlie  least,  to  ho  (lone  hy  o!Jo  of  the  latter  as  by  the  former. 

I  do  not  feel  justified  in  adding  much  to  what  I  said  to 
the  (Jommittee  in  opening  the  discussion,  on  the  subject  of 
requiring  the  (Canadian  railroads  to  take  out  a  license  for 
engaging  in  the  interstate  tratlic  business.  1  then  pointed 
out  that  such  a  license  would  not  in  the  slightest  degree 
remove  the  alleged  ditliculty  of  detecting  violations  of  the 
law  by  the  Canadian  carriers,  and  that  the  pemilty  of  for- 
feiture of  the  license  for  any  violation  was  too  severe,  an<l 
fiaught  with  danger  from  its  susceptibility  to  abuse.  I 
further  urged  that  such  license  should  not  bo  required  of 
the  Canadian  carrier,  unless  required  also  of  the  American 
carrier ;  that  there  is  no  good  ground  for  such  discrimina- 
tion. 

It  was  said  by  Messrs.  Russel  and  Pond,  in  reply,  that  if 
the  license  were  required,  and  the  penalty  of  forfeiture 
existed,  It  would  have  the  effect  of  making  the  Canadian 
carrier  more  careful  in  observing  the  Interstate  Commerce 
law.  If  this  is  true  as  to  these  carriers,  would  not  the  effect 
of  such  a  license  system  bo  equally  wholesome  for  the 
American  carriers,  and  should  it  not,  therefore,  be  extended 
to  tiiem  ?  If  the  reasoning  is  worth  anything,  it  goes  to 
this  extent.  As  I  have  said,  there  is  no  basis  in  reason  for 
a  distinction  in  this  matter  between  these  railroads. 

But  no  account  is  taken  by  the  promoters  of  this  license 
scheme  with  forfeiture,  of  the  consequences  to  the  carrier 
and  the  public  of  a  temporary  suspension  of  business  on  one 
of  these  routes — a  suspension,  say,  of  ninety  days.  In  the 
first  place,  the  carrier  could  not  recover  its  business  after 
such  a  suspension,  for  many  months.  The  loss  would  be 
irreparable.  Shippers  by  its  route  would  have  entered  into 
arrangements  more  or  less  permanent  with  other  routes.  It 
would  be  extremely  difficult,  and  take  a  long  time,  to  recover 
the  amount  of  traffic  thus  lost. 


"^.v 


21 


i'ui)k  line  ruil- 

liiible,  to  say 

|r  the  former. 

rliut  I  Silid  to 

ho  subject  of 

n  license  for 

then  pointed 

jrhtust   degree 

lations  of  the 

enalty  of  for- 

00  severe,  and 

'  to  abuse.      I 

bo  required  of 

the  American 

ich  discriniina- 

n  reply,  that  if 
ly  of  forfeiture 
;  the  Canadian 
state  Commerce 
lid  not  the  eflfect 
)lesomo  for  the 
are,  be  extended 
liing,  it  goes  to 
lis  in  reason  for 
ailroads. 

5  of  this  license 
s  to  the  carrier 
'  business  on  one 
ty  days.  In  the 
;8  business  after 
10  loss  would  be 
lave  entered  into 
other  routes.  It 
;  time,  to  recover 


The  embarrassing  effect  on  the  public,  accustomed  to  rely 
on  the  particular  route,  would  also  bo  very  great.  Kven 
thff*;  part  of  the  public  immediately  tributary  to  it,  and 
which  might  bo  specially  accommodated  by  it,would  be  forced 
to  seek  another  and  more  remote  route  of  shipment,  involv- 
ing  for  them,  not  only  much  inconvenience,  but  a  large  addi* 
tional  expense. 

This  is  only  hinting  at  some  of  tho  consequences  that 
would  follow  tho  forfeiture  of  a  license,  for  even  a  brief 
period  of  time.  There  are  many  other  and  very  serious 
results  that  'vculd  inevitably  ensue,  which  will  readily  occur 
to  any  one  who  thinks  tho  mutter  out.  Tho  penalty  is  too 
severe,  in  addition  to  the  fact  that  it  would  iiiHict  punish- 
ment on  the  innocent.  Tho  idea,  I  submit,  is  not  creditable 
to  its  inventor.  All  the  benefits  combined  of  the  Interstate 
Commerce  law  are  not  worth  this  cost. 

In  correction  of  the  statement  made  by  Mr.  Russel  as  to 
the  percentage  of  the  aggregate  of  east-bound  traffic  out  of 
Chicago  which  has  been  taken  by  the  Canadian  routes,  I 
submit  the  following  tables,  showing: 

1.  The  total  shipments  of  live  stock  during  the  year  1890 
and  the  first  three  months  of  1891,  and  the  percentage 
carried  by  each  route. 

2.  A  similar  statement  in  respect  of  the  dressed  beef. 

3.  A  similar  statement  in  respect  of  all  other  traffic. 
These  statements  are  takeii  froiii  the  official  record  of  the 

Central  Traffic  Association,  and  aro  tlierefore  reliable. 

Tile  last  statement  does  not  include  tiio  AVabash,  the  Chi- 
cago &  Erie,  or  the  C.  C.  C.  ife  St.  L.  lines,  for  the  reason 
that  no  reports  have  been  made  by  them,  and  it  is  impos- 
sible to  give  the  figures. 


22 


Live  Stock  Shipments  from  Chicago. 


ROADS. 

Year  1890. 

Jan ,  Feb.,  March, 

1891. 

Tons. 

Per  Cent. 

Tons. 

Per  Cent. 

C  &  G.  T    ..           

233.274 

114,823 

196,519 

186.796 

16,848 

84,2.« 

198,753 

7,113 

1,815 



22.4 
11.0 

18.9 

18.0 

1.6 

l\ 
0.7 
0.2 

57.097 
23.851 
84.067 
48,888 

4,268 
25,735 
52  660 

7,087 
412 

18.8 

M.C 

L.8.&M.S 

P  F.  W  &  C         

7.8 
27.6 
16.1 

P.  C.  C.  &8t.  L 

1.4 

B.  &  O 

8.5 

N.  Y.  C.  &St.  L 

17.3 

C.  &  Erie 

2.3 

Waliash 

0.2 

C.  C.  C.  &  St.  L . 

Total 

1,040,172 

100.0 

304,068 

100.0 

DiiEssEcn  HcEF  Sbipuents  frou  Cbicaoo. 


ROADS. 

Year  1890. 

Jan  ,     Feb  ,  March, 
1691. 

Tons. 

Per  Cent. 

Tons. 

Per  Cent. 

c.  &  a.  T 

M.  C 

131,999 

183,334 

115,628 

31,019 

.56,248 

21.042 

5.465 

15,560 

84,107 

1.912 

599,323 

225 

22.3 

19.3 

5.2 

9.4 

3.5 

0.9 

2.6 

14.0 

0.3 

100.0 

29,794 

39,854 

15,200 

6.629 

11,528 

6,050 

1.258 

2116 

18,520 

896 

22.8 
80.5 

L.  S.  &M.  8 

11.6 

P.  F.  W.  &  C 

4  3 

P.C.C.&St.L 

B.  &  O 

8.8 
4.6 

N.  Y.  C.&St.L 

1.0 

C.  &Erie 

1  6 

Wabash 

14.2 

C.  C.  C.  &  St.  L 

0.6 

Total 

130,845 

100.0 

Dead  Freight  Tonnage  prom  Chicago. 


ROADS. 


B.  &  O 

C.  &  G.  T 

P.  C.  C.  &  St.  L. , 
L.  S.  &  M.  8.... 

M.  C 

N.  Y.  C.  &  St.  L. 
P.  F.  W.  &C 

Total 


Year 

1890. 

Tons. 

Percent,  j 

445,266 

14.6 

475.58-,> 

15.5 

200,094 

6.7 

512,3,55 

16.7       1 

512,125 

16.7 

381,786 

12.6 

530,251 

17.3 

Jan.,  Feb.,  :March, 

1891. 


3.060,460 


100.0 


Tons. 

Per  Cent. 

101,205 

13.1 

105.650 

21.3 

39,020 

5.0 

115,722 

14.8 

125,699 

16.1 

117.016 

15.1 

113,763 

14.6 

778,081 

100.0 

These  official  statements  csirry  their  own  refntatiou  of 
the  extravagant  figures  named  by  Mr.  Rnssel  as  the  per- 
centage of  the  Chicago  east-bound  traffic  which  had  been 
taken  by  the  Canadian  routes.     Comment  is  unnecessary. 

But  I  desire  in  this  connection  to  invite  attention  to  the 


28 


n ,  Feb.,  March, 
1891. 


ons. 

Per  Cent. 

r.097 

18.8 

3.851 

7.8 

4,087 

27.6 

8,888 

16.1 

4,268 

1.4 

5,735 

8.5 

2  660 

17.3 

7,087 

2.3 

412 

0.8 

4,063 

100.0 

n  ,     Feb  ,  March, 
1891. 


Tons. 

Per  Cent. 

59,794 

22.8 

i9,854 

30.5 

15,200 

11.6 

6.629 

4.3 

11.528 

8.8 

6,050 

4.6 

1,258 

1.0 

8116 

1.6 

18,.580 

14.2 

896 

0.6 

30,845 

100.0 

an.,  Feb.,  March, 
1891. 


Tons. 

Per  Cent. 

01,205 

13.1 

55.650 

21.3 

39,026 

5.0 

15,722 

14.8 

25,699 

16.1 

17.016 

15.1 

18,763 

14.6 

78,081 

100.0 

tj  refutation  of 
issel  as  the  per- 
diicli  had  been 
unnecessary, 
ittention  to  tlie 


percentages  of  this  traffic  shown  by  these  statements  to  have 
been  carried  by  some  of  the  other  routes.  For  the  year 
1800  tiie  Lake  Shore  road,  in  connection  with  tlie  New 
York  Central,  carried  of  the  live  stock  18  per  cent  and  a 
fraction  ;  and  for  the  three  first  months  of  1891  it  carried 
27  per  cent  and  a  fraction;  while  the  Michigan  Central 
R.  R.  carried,  for  the  corresponding  periods  respectively, 
11  per  cent  and  7.8  per  cent.  According  to  Mr.  Pond's 
logic  the  Lake  Shore  &  Michigan  Southern  Company  must 
have  been  paying  rebates  to  secure  this  undue  percentage 
over  the  Michigan  Central  Company.  The  route  of  the 
latter  from  Chicago  to  Buffalo  is  quite  equal  to  that  of  the 
Lake  Shore  Company,  and  the  shorter  as  a  matter  of  fact ; 
and  from  Bufifalo  east  the  route  is  the  same  for  both. 

During  the  same  period  the  Michigan  Central  Railroad 
can  led  22  per  cent  and  a  fraction  of  the  dressed  beef  in  the 
year,  and  30  per  cent  and  a  fraction  in  the  three  months  of 
1891,  as  against  19  per  cent  and  a  fraction  carried  by  the 
Lake  Shore  &  Michigan  Southern  road  for  the  year,  and  11 
per  cent  and  a  fraction  for  the  three  months.  Is  it  possible 
that  the  Michigan  Central  Railroad  Company  was  paying 
rebates  on  this  traffic  1  The  inference  is  not  only  legiti- 
mate, but  it  is  irresistible,  according  to  Mr.  Pond. 

Now  in  respect  of  the  percentages  of  this  Chicago  traffic 
east-bound,  I  contend  that  the  Michigan  Central  and  Lake 
Shore  Railroads  should  not  be  treated  fully  as  two  separate 
and  equal  factors  as  against  the  Chicago  &  Grand  Trunk 
Railway.  The  latter  has  not  only  its  New  England  connec- 
tions, but  it  has  several  railroads  at  Buffalo  connecting  with 
New  York,  all  of  which  want  a  share  of  this  Chicago  traffic, 
and  in  fairness  have  a  right  to  it  equally  with  the  New 
York  Central  Railroad.  The  Michigan  Central  and  Lake 
Shore  roads  are  siniplj'  feeders  of  the  New  York  Central 
road,  as  to  the  great  bulk  of  this  traffic  carried  by  them. 
•  The  situation  therefore,  I  submit,  does  not  justify  each  of 


.  -^  *»<«iW-*i»-**S*'"V 


TWSSmssssaTBsa^wm 


24 

these  in  the  demand   for  an  equal  percentage  of  this  traffic 
with  the  Chicago  &  Grand  Trunk  Railway  Company. 

In  concUision,  I  deny  that  tlie  Canadian  routes  have  taken 
an  undue  proportion  of  the  Chicago  east-hound  traffic. 
What  they  have  got,  they  have,  I  helieve,  secured  by 
legitimate  business  methods,  and  without  violating  the  law. 
Courtesy  and  a  spirit  of  accommodation  are  as  potent  in  this 
department  of  business  as  in  any  other.  A  good  deal  of 
the  popular  favor  which  the  Grand  Trunk  Railway  Com- 
pany enjoys  and  reaps  benefit  from  with  the  shipping  pub- 
lic of  the  United  States,  is  no  doubt  due  to  the  civility  of  its 
officers  and  agents.  There  is  more  virtue  in  this  as  an 
agency  for  getting  traffic  than  has  yet  been  dreamed  of  by 
some  of  our  xVmerican  railway  friends. 


e  of  this  traffic 

/ompany. 

ites  have  taken 

bound    traffic. 

e,    secured    by 

)lating  the  law. 

IS  potent  in  this 

{rood  deal   of 

Railway  Com- 

3  shipping  pnb- 

10  civility  of  its 

in  this  as   an 

dreamed  of  by 


THE  CANADIAN  RAILROAD  QUESTION 


ARGUMENT  OF  A.  C.  RAYMOND. 

Mr.  Chairman— It  is  now  a  little  more  than  two  years 
since  the  agitation  of  the  Canadian  railway  question  began 
in  the  Congress  of  the  United  States.  For  more  than  fif- 
teen years  the  competition  between  American  and  Canadian 
railways  has  been  continuous  and  bitter,  and  next  to  the 
lake  and  canal  route  frotn  the  West  to  the  sea-board,  the 
Canadian  railways  have  exercised  the  most  controlling  regu- 
lative influence  upon  rates  of  transportation.  From  this 
competition  American  merchants,  shippers,  producers  and 
consumers  have  received  inestimable  benefits.  Large  areas 
of  American  territory,  notably  New  England  and  the  West 
and  Northwest,  have  been  put  in  communication  with  each 
other  at  such  advantageous  rates  for  transportation  as  had 
not  been  made  and  indeed  could  not  be  made  over  purely 
American  lines.  Nearly  all  those  portions  of  interior  New 
England  lying  north  of  the  Boston  &  Albany  Railroad,  were 
formerly  compelled  to  pay  by  the  addition  of  what  is  known 
as  "  arbitraries,"  much  higher  rates  than  those  current  to 
Boston.  The  advent  of  the  Grand  Trunk  Railway  of  Can- 
ada largely  swept  away  those  "  arbitraries,"  and  placed  all 
portions  of  New  England  upon  substantially  the  Boston 
basis.  Many. and  relentless  were  the  attacks  upon  the 
Grand  Trunk  Railway  by  its  American  competitors,  but 
although  sorely  bruised  and  beaten  in  the  conflict  it  has 
always  steadily  held  every  field  of  wiiich  it  has  once  pos- 
sessed itself.     With  the  exception  of  occasional  periods  of 


26 

peace  and  compromise,  this  state  of  warfare  was  well  nis;li 
continuous  up  to  tlie  time  of  the  passage  of  the  Interstate 
Commerce  Act  which  took  effect  April  5th,  1887. 

The  novel  sensation  of  national  control,  and  the  new 
adjustments  therehy  rendered  necessarj',  diverted  the  atten- 
tion of  the  American  railways  from  their  old  competitor  for 
nearly  a  year.  The  American  lines  discovering  that  the 
Interstate  Commerce  Act  had  not  bankrupted  them,  as  they 
had  so  confidently  asserted  pending  its  passage,  but  that 
their  traffic  was  enlarging  and  their  revenues  were  increas- 
ing, began  to  seek  for  new  means  of  chastening  their  imper- 
turbable Canadian  rival.  The  former  rough  and  forceful 
methods  of  ruinous  competition  were  rendered  obsolete  by 
the  Interstate  Commerce  Act,  but  an  ingenious  and,  if  suc- 
cessful, far  more  effective  one,  remained.  It  was  to  trans- 
fer to  the  halls  of  Congress,  the  contest  heretofore  so 
fiercely  waged  in  the  field,  and  to  appeal  to  the  patriotic 
instincts  of  the  American  people  to  shield  their  infant  (?)  rail- 
road indnstricE  '  jm  impending  destruction  at  the  hands  of 
menacing  foreign  corporations. 

The  preliminary  skirmishing  promptly  began  under  the 
leadership  of  that  dashing  cavalryman  of  the  late  civil  war, 
General  J.  H.  Wilson,  of  Wilmington,  Delaware,  who 
appeared  at  Washington  before  the  Senate  Committee  of 
Interstate  Commerce  February  10th,  1888,  and  made  an  elab- 
orate attack  upon  Canadian  railways.  March  16th,  1888,  he 
repeated  this  attack  by  a  long  speech  before  the  Committee 
on  Commei  e  of  the  House  of  Representatives,  in  which  he 
advocated  tiie  exclusion  of  Canadian  railways  from  partici- 
pation in  American  traflic,  and  the  abolition  of  the  "  Transit 
in  Bond  system  "  which  had  been  in  continuous  operation 
since  it  was  authorized  by  Act  of  Congress  in  1866. 
Especial  prominence  was  given  to  these  speeches  by  a  certain 
leading  American  journal  which  published  them  in  full, 
and  in  vigorous  leading  articles  at  frequent  intervals,  pro- 


,^ 


was  well  niojh 

tlie  Interstate 
1887. 

and  the  new 
erted  the  atten- 

competitor  for 
ering  that  the 
d  them,  as  they 
ssage,  but  that 
8  were  increas- 
iig  their  imper- 
;li  and  forceful 
red  obsolete  bj 
0U8  and,  if  suc- 
It  was  to  trans- 

heretofore  so 
to  the  patriotic 
ir  infant  (?)  rail- 
at  the  hands  of 

igan  under  the 

e  late  civil  war, 

Delaware,   who 

Committee  of 

d  made  an  elab- 

1  16th,  1888,  he 

the  Committee 

es,  in  which  he 

s  from  partici- 

af  the  "  Transit 

uous  operation 

ress    in    1866. 

les  by  a  certain 

them    in   full, 

intervals,  pro- 


27 

moted  and  advocated  Wilson's  scheme.  A  set  of  resolu- 
tions embodying  it  was  promptly  introduced  into  the  House 
of  Representatives  and  referred  to  the  Committee  on  Com- 
merce. Thus  was  "  the  leaven  hid  in  the  measure  of 
ineal." 

Instant  and  overwhelming  protests  were  made  by  the 
various  commercial  organizations  in  Portland,  Boston, 
Petroit,  Chicago,  Milwaukee,  Minneapolis,  St.  Paul,  Duluth 
and  Peoria.  The  newspapers  in  these  cities  with  one  voice 
Renounced  the  proposed  destruction  of  the  competition  of 
tlie  Canadian  lines,  and  petitions,  remonstrances  and  mem- 
orials, came  pouring  into  Congress  in  a  flood,  and  the  House 
Committee  on  Commerce  took  no  action  on  the  resolutions. 

The  subject  was  revived  in  the  50th  Congress  by  an 
amendment  to  tne  Senate  Tariff  Bill,  proposed  by  Senator 
Morgan,  of  Alabama,  to  the  effect  of  prohibiting  the  impor- 
tation in  bond  through  American  sea-ports,  of  merchandise 
designed  for  Canadian  markets.  This  was,  however, 
defeated.  Meanwhile  the  American  competing  interests 
had  not  been  idle,  but  through  the  columns  of  the  press  and 
otherwise,  continued  industriously  and  unceasingly  to  com- 
plain of  the  ravages  of  the  foreign  railway  corporations, 
which  resulted  in  Congress  authorizing  the  Senate  Commit- 
tee on  Interstate  Commerce,  of  which  Senator  Cullom  is 
chairman,  to  make  a  tour  of  the  country  and  investigate  the 
relations  of  American  and  Canadian  railways  and  waterways. 
This  Committee  visited  the  cities  of  New  York,  Boston, 
Detroit  and  Chicago,  and  were  everywhere  met  by  the  rep- 
resentatives of  commercial  interests  with  strong  protests 
against  any  interference  with  Canadian  railways  which 
ahould  cripple  or  destroy  their  most  valuable  and  desirable 
competition.  The  question  was,  however,  invariably  asked 
of  every  witness  by  the  committee,  "Whether  bethought 
Canadian  railways  should  be  subjected  to  the  same  regula- 
tions and  restraints  as  were  imposed  upon   American  rail- 


5* 


28 


i» 


ways,"  Of  course  every  witness  invariably  answered  tliat 
he  did,  even  if  at  tlie  same  time  he  questioned  the  necessity 
of  a  Senate  committee  making  a  tour  of  the  country  to  ask 
a  question  which  could  have  but  one  answer. 

Tiiis  committee  on  "  The  general  relations  of  Canada  and 
the  United  States"  continued  the  investigation  of  the  rail- 
road question  at  the  cities  of  Minneapolis,  St.  Paul,  Tacoiiia, 
Portland  (Oregon)  and  San  Francisco,  and  met  with  the 
same  protests  from  commercial  interests.  The  representa- 
tives of  the  competing  railway  interests,  who  appeared 
before  the  committees  almost  invariably  urged  some  legis- 
lation which  should,  as  they  diplomatically  phrased  it, 
"  impose  upon  the  Canadian  lines  the  same  regulations  and 
restrictions  as  those  placed  by  law  upon  American  lines." 
This  fair  seeming  proposition  was,  as  before  mentioned, 
cordially  assented  to  by  all  classes  of  witnesses,  and  it  only 
remained  to  point  out  the  particulars  wherein  the  law  dis- 
criminated in  the  carrying  of  American  traffic  in  favor  of 
the  Canadian  lines  and  against  their  American  rivals.  The 
testimony,  however,  reveals  no  attempt  by  any  American 
railway  rejjresentative  to  specifically  pohit  out  such  a  dis- 
crimitiatioH. 

As  there  was  no  cross-examination  of  witnesses,  and  some 
of  the  testimony  consists  of  elaborately  written  statements 
or  briefs,  some  extremely  ill-founded  and  inaccurate  state- 
ments  of  alleged  facts,  necessarily  passed  unchallenged. 

The  reasons  alleged  by  their  American  competitors  for 
furtlier  legislative  restriction  or  regulation  of  Canadian 
railroads  group  themselves  as  follows: 

1st.  The  advantages  of  Canadian  railroads  by  reason  of 
excessive  governmental  subsidies  and  foreign  capital. 

2d.  The  diversion  to  Canadian  railroads  of  traffic  which 
naturally  belongs  to  American  railroads. 

(a)  Transcontinental  traffic  of  American  origin  and  des- 
tination ;  (J)  transpacific  traffic  to  the  Canadian  Pacific 
railroad. 


1 

,; 

i 

1 

29 


ly  answered  that 
)ned  the  necessity 
he  country  to  ask 
er. 

>ns  of  Canada  and 
Ration  of  the  rail- 
St.  Paul,  Taconia, 
nd  met  with  tlie 
The  represen ta- 
ts, who  appeared 
irged  some  legis- 
cally  phrased  it, 
le  regnhitions  and 
American  lines." 
)efore  mentioned, 
esses,  and  it  only 
jrein  the  law  dis- 
traffic  in  favor  of 
rican  rivals.  The 
y  any  American 
it  out  such  a  dis- 


itnesses,  and  some 
irritten  statements 
inaccurate  state- 
unchallenged. 
II  competitors  for 
ion  of   Canadian 


3ads  by  reason  of 

gn  capital. 

s  of  trafHc  which 


m  origin  and  des- 
Canadian   Pacific 


3d.  The  advantage  of  the  Canadian  railroads  in  their 
local  trafiic,  the  Interstate  Commerce  Act  enabling  them  to 
recoup  their  losses  on  long-haul  American  traffic  by  high 
local  ratcF 

4th.  The  lower  cost  of  operation  of  Canadian  railroads. 

5th.  The  differentials  which  American  railroads  are  com- 
pelled to  grant  to  their  Canadian  competitors. 

6th.  The  destruction  of  the  revenues  of  American  lines 
by  excessive  competition. 

7th.  The  national  policy  of  protection  should  apply  to 
American  railroads  as  well  as  to  American  merchants  and 
manufacturers. 

Six  of  these  reasons  must  stand  or  fall  according  to  the 
facts  which  either  sustain  or  disprove  them.  The  seventh 
reason  rests  upon  a  theory  which,  to  be  consistently  advo- 
cated, must  coincide  with  the  general  policy  of  those  who 
proclaim  it.  My  purpose  is,  therefore,  to  confine  myself 
mainly  to  the  facts  which  underlie  this  great  question,  in 
full  confidence  that  their  unprejudiced  consideration  will 
disprove  each  and  every  one  of  these  alleged  reasons. 

First  Rkason — Excessive  Subsidies  and  Foreign  Capital. 

These  features  of  railwav  construction  are  as  characteristic 
of  American  as  of  Canadian  lines.  The  vast  sums  con- 
tributed to  American  railways  by  federal,  State  and  muni- 
cipal authorities  are  well  known.  Mr.  Patterson,  a  member 
of  the  Union  Pacific  Railroad  Commission,  states  in  his 
report,  that  "governmental  aid  to  that  corporation  will  have 
amounted  in  1895,  when  the  ol)ligations  mature,  to  J^our 
hundred  and  forty-seven  millions  of  dollars y 

Mr.  C,  P.  Huntington,  president  of  the  Southern  Pacific 
Railroad  said  to  the  House  Committee  on  Pacific  Railroads, 
in  the  Fiftieth  Congress,  that  "  the  government  made  a 
land  grant  to  the  Northern  Pacific  Railroad  of  much  greater 
value  than  the  lands  and  bonds  together  which  were  granted 
to  the  Central  and  the  Union  Pacific  companies." 


M  '^^i 


80 

The  iintiiensely  valuable  subventions  to  the  Southern 
Pacific  and  Atlantic  and  Pacific  companies  are  matters  of 
history.  Pennsylvania,  Maryland,  New  York,  Massachu- 
setts and  Illinois,  and  tlie  cities  of  Piiiladelphia,  Baltimore 
and  Cincinnati  are  notable  examples  of  State  and  municipal 
aid  to  railroads.  Our  friends  across  the  border  have  been 
but  feeble  imitators  of  ourselves  in  those  matters.  It  is 
absurd  to  claim  that  either  country  in  thus  seeking  to 
develop  its  transportation  interests  has  been  influenced  by  a 
feeling  of  political  or  commercial  hostility  to  the  other. 

The  Grand  Trunk  railroad,  as  at  present  organized,  has 
not  been  the  recipient  of  any  considerable  government  aiil. 
One  of  the  original  companies  now  consolidated  into  the 
main  organization  did,  in  1852,  receive  a  governnient  loan 
of  $15,000,000,  which  has  never  been  returned  and  on  which 
no  interest  is  paid.  The  Canadian  Pacific  company  has 
received  fairly  liberal  assistance  from  the  Dominion  Gov- 
ernment, but  small  in  comparison  with  American  transcon- 
tinental lines,  and  very  much  less  than  the  amount  claimed 
by  its  American  competitors. 

The  following  table  was  submitted  to  the  committee  last 
year  by  one  witness,  who  claimed  it  to  be  a  reliable  state- 
ment of  the  subventions  granted  to  the  Canadian  Pacific 
company.  Notwithstanding  repeated  denials  from  oflicial 
sources,  this  table  has  been  widely  quoted  as  authoritative 
and  true  by  the  press,  and  even  on  the  floor  of  the  United 
States  Senate. 

In  view  of  the  fact  that  Mr.  Van  Home,  the  president  of 
the  Canadian  Pacific  company,  at  a  hearing  of  the  Senate 
Committee  on  Interstate  commerce  held  in  New  York  in 
May,  18S9,  showed  the  utter  untruthfulness  of  the  table,  it 
is  difficult  to  understand  the  statement  by  its  author  to  this 
committee  in  April,  1890,  that  "  the  president  of  the  Can- 
adian Pacific  railroad  has  conceded  that  this  is  a  correct 
statement  of  the  direct  aids  which  the  company  has  received 


^1 


o. 


the  Soutlieni 
ire  matters  of 
irk,  Massaehn- 
liia,  Baltimore 
and  municipal 
:ler  have  been 
matters.     It  is 
us   seeking   to 
nflueneed  by  a 
the  other, 
organized,  has 
Dvernnient  aid. 
dated  into  the 
vernment  loan 
:l  and  on  which 
3  con)pany  has 
dominion  Gov- 
rican  transcon- 
mount  claimed 

committee  last 

reliable  state- 

luadian  Pacific 

8  from  offtciid 

IS  authoritative 

of  the  United 

le  president  of 
of  the  Senate 
New  York  in 
of  the  table,  it 
s  author  to  this 
ent  of  the  Caii- 
lis  is  a  correct 
ny  has  receivcij 


from  the  Dominion  Government."  The  following  is  the 
table  as  found  on  page  896  of  the  testimony  already  taken 
by  this  committee : 

Bavlged  estimate  of  gifts  from  the  Dominion  Government  to  the  Canadian  Paclflc 
Railway  Company,  and  securities  which  that  company  has  been  enabled  to  float 
(stock  and  bondu)  as  the  result  of  the  Dominion  guaranty  and  the  land  grant  of 
25,000,000  acres  of  land  : 

Oash  subsidies  as  follows: 

1.  (a)  Subsidy  of  Si2S,000,000  mentioned  In  section  8  of  act  of  February  15, 
1E81 :  (b)  714  milen  of  railroad  constructed  by  the  Dominion  Govern- 
ment, costing  S35,0U0,C0O,  which  was  presented  to  the  Canadian 
Paclflc  Company  as  a  gift,  with  interest  to  June  80, 1887;.  (See  Pub- 
lic Accounts  of  Canada  for  1887) 861,760,786 

a.  CapiUI  stock  originally  8100,(00,000,  but  reduced  to  955,000,000,  with  a 
dividend  of  3  per  cent,  guaranteed  for  ten  years.  (See  Poor's 
Manual) 65,000,000 

9,  During  the  session  of  Parliament  of  1884  the  Dominion  Government 
authorized  a  loan  to  the  company  of  $20,880,016,  to  be  paid  as  the 
work  of  constiuction  continued,  and  for  the  purpose  of  expediting 
construction.  Of  this  amount  $0,880  912  Is  secured  by  lien  on  the 
entire  road  and  land  grant,  subject  to  the  then  outstanding  land- 
grant  bonds;  also  government  bonds  to  the  amount  of  $20,000,000, 
which  were  exchanged  fur  a  like  amount  of  the  company's  loan  of 
$35,000,000,  which  had  been  issued  in  the  place  of  the  $35,000,000  of 
original  stock  which  had  been  retired.    (See  f>ec.  4,  act  30,  July,  1885)     20,880,912 

4i  Balance  of  $.35,000  000  loan,  after  deducting  $20,000,000,  placed  in  the 
hands  of  the  govtrnmeut,  in  order  to  secure  the  $20,000,000  bonds 
above  mrntioned 15,000,000 

5.  Land-grant  bonds  issued  by  the  company  as  a  lien  upon  the  lands 

which  it  acquired  by  gift  of  the  Dominion 25,000,000 

8,  Bonds,  interei't  guaranteed  by  the  Dominion  for  flfty  years  at  S%  per 
cent.,  issued  to  the  company  for  the  purpose  of  remuneratii  (^  it  for 
the  loss  of  its  relirquishmeut  of  the  monopoly  of  railroad  building  in 

Manitoba 16,000,000 

Subsidy  of  $186,000  a  year  for  twenty  years  to  line  through  the  State 
of  Maine 3,720,000 

Total $215,361,697 

".  "  Of  this  total  eiim  about  $105,000,000  may  be  classed  as 
cash  and  gifts  available  as  cash,  and  $110,000,000  as  guaran- 
ties of  secuiities. 

The  president  of  the  Canadian  Pacific  Railroad  has  con- 
deded  that  this  is  a  correct  statement  of  direct  aids  which 
the  company  has  received  from  the  Dominion  Government." 

The  joining  by  the  northwestern  British  Provinces  of  the 
Canadian  Federation,  in  1867,  was  made  conditional  upon  the 
building  by  the  government  of  a  trans  continental  railroad 
affording  direct  communication  between  thei".  and  the  middle 
and  maritime  provinces.  The  government  accordingly  under- 
took the  construction  of  the  Canadian  Pacific  Railroad. 
Xjarge  sums  of  money  were  wastefuUy  spent  in  surveying 
•ftveral  possible  routes,  and  finally  714  miles  were  con- 
structed  in   the  extravagant  and    unbusinesslike   manner 


32 

characteristic  of  most  govenunontal  enterprises.     Tijc  line 
consisted  of  three  detaclied  portions,  one  extending  eastward 
from  the  Pacific  coast,  one  along  a  portion  of  tlio  north 
shore  of  Lal<e  Superior,  and  one  soutiiward  from  Winnipog 
towards  tlie  United  States  boundary.     Thirty-five  millions 
of  dollars  had  thus  been  expended,  a  largo  proportion  of 
which  had  been  wasted,  and  the  government  finding  itself 
unable  to  complete  the  enterprise  short  of  baidcrnptcy,  and 
still  bound  by  its  solemn  pledge  to  the  northwestern   pro- 
vinces, offered  to  any  private  company  which  would  complete 
the  work,  to  donate  the  714  miles  already  built,  $25,000,0U() 
in  cash,  25,000,000  of  acres  of  land,  exemption  from  taxa- 
tion and  certain  monopoly  privileges  against  the  buildini; 
of  other  lines  for  a  specified  term  of  years.     President  Van 
Home  stated  under  oath  in  New  York  in  May,  18S9,  tiiat 
these  widely  separated  lines  composing  the  714  miles  above 
mentioned,  and  which  had  cost  the  government  $35,000,000 
were  worth  practically  nothing  to  his  company.   That  he  was 
obliged  to  abandon  the  government  surveys  which  had  cost 
several  millions  of  dollars,  and  make  new  ones,  that  the  cost 
of  the  remainder  of  the  line  was  largely  increased  by  reason  of 
being  obliged  to  connect  it  with  the  unwisely  located  7U 
miles,  and  that  even  as  they  stood  he  could  have  duplicated 
them  with  $12,000,000.     It  is  evident  then  that  the  first 
item  of  the  table  should  stand  at  $37,000,000. 

The  capital  stock  was  finally  fixed  at  $65,000,000,  but 
not  a  dollar  of  it  was  ever  purchased  or  owned  by  the 
Dominion  Government  and  is  not  now.  Every  share  of  it 
was  purchased  and  paid  for  by  private  parties  and  the 
proceeds  were  applied  to  the  discharge  of  the  Company's 
obligations,  or  to  the  construction  of  its  railroad.  The 
assertion  then  that  the  capital  stock  was  a  gift  from  the 
g,:)vernment  is  simply  an  unblushing  and  reckless  disregard 
for  the  truth. 

The  government  guarantee  of  a  3  per  cent  dividend  for 


38 


isoe.     The  line 
iiding  eastward 
1   of  tlio  north 
roiii  Winnipeg 
ty-tivc  millions 
)  proportion  of 
t  tinding  itself 
(anUruptcy,  and 
•thwestern   pro- 
would  complete 
lilt,  $25,000,000 
tion  from  taxa- 
ist  the  build inj,' 

President  Van 
May,  18S9,  that 
714  miles  above 
lent  $35,000,000 
\y.  That  he  was 
i  which  had  cost 
les,  that  the  cost 
ased  by  reason  of 
sely  located  7U 

have  duplicated 
jn  that  the  tirst 

)0. 

^65,000,000,  but 

owned    by  tlie 

very  share  of  it 

parties   and  the 

the  Company's 

railroad.      The 

a  gift  from  the 

jckless  disregard 

3nt  dividend  for 


ton  years  was  not  a  gift,  but  an  annuity  purchased  from  the 
government  by  the  Company  with  an  actual  deposit  of  cash. 
The  second  item  of  this  table  may  therefore  be  safely  set 
down  at  nil. 

Tlie  third  item  is  so  clumsily  stated  as  not  to  convey  a 
Tory  intelligible  idea  of  the  author's  meaning.     It  is  insinu- 
Atod   rather  than  stated   that   the   Dominion  Government 
iianed   its  own  obligations  to  the  amount  of  $20,000,000, 
and   turned  them  over  to  the   company.     This  is  whoiiy 
untrue.       The  facts  which  are  supposed  to  be  concealed 
within   the  depths  of  this    hazy    item,  are    brieHy    these. 
The  stock  panic  in  1884  involving  the  financial  failure  of 
Grant  &  Ward,  Henry  Villard,  and   others,   created   such 
distrust  in  monetary  circles,  that  the  Canadian  Pacific  Com- 
pany found  it  difRcult  if  not  impossible  to  market  its  stock 
and  securities,  and  the  construction  of  its  railroad  would  have 
Oeased  but  for  the  temporary  assistance  furnished  by  the 
government.       Parliament   authorized  a  loan  to  the  com- 
pwiyj  on  a  blanket  mortgage  covering  all  its  assets,  at  4  per 
Oent  which  amounted  finally  to  $35,000,000.  It  then  author- 
jiaed  a  reduction  in  the  capital  stock  of  the  company  from 
$100,000,000    to    $65,000,000.       It    then    granted  to  the 
OODipany  the  power  to  issue  in  lieu  of  the  $35,000,000  of 
atOck  thus  cancelled,  $35,000,000  of  its  own  bonds  bearing 
interest  at  5  per  cent.     These  bonds  were  sold  to  the  public 
in  London,  New  York  and  elsewhere,  and  from  their  pro- 
oaeds  $25,000,000  in  cash  were    paid    into   the  Dominion 
treasury   towards   the  satisfaction  of  the   temporary   loan. 
This  left  $10,000,000  still  unpaid,  which  was  liquidated  by 
tlie   return  to  the  government  of  enough  of  its  land-grant 
at  $1.50  per  acre  (about  7,000,000  acres)  to  pay  the  balance. 
The  gift  represented  therefore  in  this  item  should  stand 
at  $10,000,000. 

'The  fourth  item  is  a  bungling  repetition  of  a  part  of  the 
N^usactions  covered  by  the  third  item,  and  should  there- 
l<lre  be  cut  out,  or  stand  at  nil. 


84 


Tlic  fifth  itoin  is  a  tnio  statoinent.  Tho  bonds  were 
issued  l>y  tho  cotnpiiny  and  sociirod  by  the  lands  givon  to  it 
by  tho  govorninont.  Thoso  bonds  have  sinco  that  time 
been  redccniod  by  tho  company  and  tho  lands  are  now 
pledged  for  other  pnrposos,  as  will  subsequently  appear, 
This  item  should  therefore  stand  at  $25,000,000. 

The  sixth  item  states  correctly  the  transaction  involved. 
but  has  no  place  in  a  schedule  of  }?ift8.    Upon  the  organiza- 
tion  of    tho  Canadian  Pacific  Company,  the  governinoiit 
agreed  that  no  lino  of  railroad  leading  southward   from  the 
Canadian    Pacific  Railroad  to  the  United  States  boundary, 
should  be  built  for  a  period  of  twenty  years.     This  was  to 
insure  traffic  to  tho  division  of  the  railroad  lying  north  of 
Lake  Superior,  as  tho  barren  country  through  which  it  v\\\i 
could  furnish  it  little  or  no  local  traffic.     The  Manitoba  peo 
pie  desired  to  build  a  railroad  of  their  own  to  the  interna 
tional  boundary,  and  vigorously  and  oven  violently  demanded 
a  rescission  by  the  government  of  its  contract  with  the  Caiia 
dian  Pacific  Company.     This   monopoly  privilege  was  oi 
material    value  to  the  company  in  marketing  its  securities, 
and  its  cancellation  was  likely  to  interfere  with  their  sale 
To  relieve  the  company  from  this  embarrassment  and  at  tlit 
same  time  placate  tho  people  of  Manitoba,  the  governiueiii 
agreed  that  for  the  surrender  of  so  much  of  the  contract,  i: 
would  guarantee  3^  percent,  interest  on  $15,000,000  uf  tin 
company's  fifty  year  bonds.     The  government's  guaranty! 
secured  by  a  lien  on  all  the  unsold  lands  of  the  companv 
proceeds  of  all  sales  of  which  are  to  be  received   directi; 
into  the  Dominion  treasury,  until  such  a  sinking  fund  slia! 
be  accumulated  as  will  reimburse  the  government  for  tl; 
interest  and  principal  of  the  bonds  at  maturity.     The  lieni 
then  to  be  cancelled,  and  the  unsold  lands  are  to  revert  t 
the   control  of    tho  company.     This  item   should  cleark 
therefore,  be  stricken  from  the  list  of  "gifts." 

The  seventh  item  also  rests  on  misstatement.     Some  year 


1< 


riio  bonds  were 
laiula  j;ivon  to  it 
since  that  time 
3  lands  nro  now 
eqnontly  appear. 

3,000. 

saction  involved, 

poTi  the  orgiuiiza- 

the  government 
thward   from  the 

States  bonndiin', 
ars.  This  was  to 
id  lying  north  o( 
lUgh  which  it  vn\: 
Che  Manitoba  pco 
m  to  the  interna 
violently  demanded 
ract  with  the  Cuna 

privilege  was  oi 
eting  its  securities, 
re  with  their  sale 
rassment  and  at  tlit 
a,  the  governmeii; 
I  of  the  contract,  i 

$15,000,000  uf  til. 
iment's  guaranty! 
8  of  the  compaiiv 
J  received  directl 
I  sinking  fund  slin 
rovernment  for  tli 
iturity.  The  lien: 
da  are  to  revert  t 
em   should  cleiirl; 

gifts." 

ement.     Some  year 


85 

•gOf  before  the  Canadian  Pacific  Kaih'oad  was  built,  the  Mari- 
time Provinces  complained  of  the  long  and  round  about 
ronte  via  the  [ntercolonial  Railroad,  and  demanded  a  shorter 
line  to  Montreal.  The  Dominion  government  thereupon 
o£fered  a  subsidy  of  $160,000  per  annum  for  twenty  years 
to  any  company  which  would  build  a  short  line  via  the  State 
of  Haine.  The  International  Railroad  Co.  of  Canada  and 
Maine  was  formed  to  build  the  line.  It  failed  to  do  so,  and 
•abaeqnently  sold  its  franchise,  including  the  subsidy,  to  the 
Atlantic  &  Northwestern  Railroad  Co.  This  company, 
unable  to  complete  the  line,  transferred  its  franchise,  and  sub- 
sidy to  the  Canadian  Pacific  company  under  a  lease.  This 
snbiidy  was  therefore  acquired  by  the  Canadian  Paci- 
fic oompany  by  purchase,  and  not  by  gift.  This  item  must 
alao  be  stricken  from  the  table.     To  recapitulate: 

Conected  list  of  gifts  received  by  the  Canadian  Pacific  Railroad  from 
the  Dominion  Government. 

In  cash $25,000,000 

In  partly  built  railroad  lines 12,000,000 

In -cash  for  lands  surrendered 10,000,000 

In  lands  on  which  bonds  have  been  issued  for . .   25,000,000 

Total  direct  gifts $72;00{),000 

To  stretch  a  point,  it  might  be  assumed  that  without  the 
hmd  grant  as  security,  the  government  would  never  have 
gl«|ranteed  the  interest  on  the  $15,000,000  of  50-year  bonds, 
aiid  adding  this  to  the  amount  produced  by  the  donated 
lands,  and  it  would  only  show  a  total  of  $87,000,000.  Even 
thiB  amount  as  compared  with  the  $215,361,697,  given  in 
tJie  table  of  the  witness  referred  to,  shows  either  a  sad 
degree  of  ignorance  or  a  serious  misstatement  of  facts. 

The  bete  noir  of  the  American  railroads  is  the  annual  sub- 
ti^  granted  the  Canada  Pacific  Railway  by  the  imperial 
g<$Yernment  for  the  carriage  of  the  mails  between  Halifax 
and  Asiatic  ports  (not  between  Vancouver  and  Asiatic  ports, 
popularly  st  ited),  amounting  to  three  hundred  thou- 


36 


sand  dollars,  one-half  of  which  goes  to  the  land  portion  u. 
one-half  to  the  ocean  portion  of  the  route.  [Jp  to  thistiiiif 
none  of  this  subsidy  has  been  paid,  and  none  is  due  nnti 
the  completion  of  certain  steamships  now  building  unde 
the  supervision  of  the  British  admiralty,  and  which  are  t 
begin  service  some  time  in  April,  1891.  The  followin. 
figures  are  compiled  from  the  Second  Annual  Report  c: 
Kailway  Statistics  to  the  Interstate  Commerce  Commissio: 
for  the  year  ending  June  30,  1889.  For  the  purpose  c 
painting  the  advantages  of  the  foreign  line  in  the  strongcj 
colors  the  unearned  and  unreceived  subsidy  shall  be  adde: 
to  the  postal  compensation  received  by  the  Canada  Paciti 
railway  for  the  year  ending  June  30,  1889,  and  the  tok 
compared  with  that  received  by  some  of  Its  American  con. 
petitors  for  the  same  time. 

Canadian  Pacific  Railway — Mail  compensation.  $306,591 
subsidy,  $150,000 ;  total,  $456,591. 

Vanderbilt  System — Composed  of  various  roads,  $3,40&, 
482. 

Pennsylvania  System  —  Composed  of  various  roatli 
$2,262,001. 

Union  Pacific  System— $1,056,711. 

Southern  Pacific  Railway— $979,499. 

Northern  Pacific  Railway— $443,638. 

If,  therefore,  postal  subsidies  or  postal  compensation,  ( 
both,  measure  the  ability  of  one  railroad  system  to  compel 
with  another,  the  American  systems  are  in  no  danger  ( 
losiiig  the  race. 

If  legislation  is  to  be  directed  against  railroads  becaii; 
they  are  built  by  foreign  capital,  many  of  our  Amoricii: 
roads  would  be  in  a  pitiable  condition,  for  it  is  a  well-know 
fact  that  some  of  our  leading  roads  are  largely  owiie 
abroad,  and  the  foreign  capital  now  invested  in  America 
railroads  would  build  several  Canadian  Pacific  systems,  Tli 
stock  and  bond  capital  of  that  system  is,  as  given  on  paj 


m 


87 


e  land  portion  m. 
5.      Up  to  tliis  tillK 

none  is  due  nnti 
)\v  building  unde 

and  which  are  t 
The  foUowiii: 
Annual  Report  o: 
merce  Comniissio: 
or  the  purpose  c 
le  in  the  stronget 
dy  shall  be  adde 
•he  Canada  Pacii 
889,  and  the  tota 
lU  American  con 

jnsation.  $306,591 

ions  roads,  $3,409, 

of    various    roadi 


al  compensation,  ( 

system  to  compel 

•e  in  no  danger  t 

st  railroads  becaii; 
y  of  our  America 
r  it  is  a  well-know 
are  largely  owiic 
vrested  in  America 
'acific  systems.  Tl. 
is,  as  given  on  pag 


212  of  the  Annual  Report,  etc.,  above  mentioned,  a  frac- 
tion in  excess  of  one  hundred  and  thirteen  millions  of  dol- 
larSj  while  the  annual  remittance  for  interest  and  dividends 
on  American  railroads  to  England,  Germany  and  Holland, 
is  stated  on  reliable  authority  to  aggregate  about  one  hun- 
dred millions  of  dollars. 

If  foreign  capital />er  se  is  deserving  of  hostile  legislation, 
some  tax  or  restriction  should  at  once  be  imposed  upon  the 
English  millions  now  i^^^resented  in  our  great  breweries, 
flouring  mills,  elevators,  tobacco  factories  and  other  enter- 
prisfes. 

Second  Reason. — Diversion  of  Traffic  from  American 

Railroads. 

The  iirst  subdivision  of  this  reason  is  the  diversion  of 
traffic  which  has  an  American  origin  and  destination,  viz., 
between  San  Francisco  via  steamer  to  Vancouver  (some  800 
miles),  thence  via  Canadian  Pacific  to  American  cities  east 
of  the  Missouri  River.  Tlie  subjoined  table  tells  ils  own 
story  and  destroys  tliis  scarecrow  : 

Tons.  Earnings. 

Total  transcontinental  traffic  car- 
ried by  all  the  Transconti- 
nental Association  lines  for 
twelve  months  ending  June  31, 
1889 744,921     $17,146,641  24 

Total  "  States  to  States  "  traffic 
carried  by  the  Canadian  Pacific 
Railway  via  Vancouver  for 
same  period 12,852^  214,811  90 

Percentage  carried  by  the  Cana- 
dian Pacific ]  .72  1.25 

The  utter  insignificance  of  this  diversion  renders  it  almost 
nnnecessary  to  make  further  reference  to  east-bound  trans- 
continental traffic,  but  the  peculiar  methods  of  dealing  witjj 


'\l 


i  ^\ 


;  '5 


38 

it  displayed  by  Mr.  A.  M.  Tovvne,  general  manager  of  the 
Soutliern  Pacific  Eailway,  in  his  "open  letter"  to  this 
Senate  Committee,  deserve  a  passing  notice.  Mr.  Towne 
makes  a  startling  display  of  items  of  freight  and  the  weight 
of  each,  all  nicely  reduced  to  j>ounds.  To  the  unaccus- 
tomed eye  the  ravages  of  the  Canadian  competitor  thus 
present  a  harrowing  picture.  Reduce  Mr.  Towne's  figures 
to  car-loads  of  fifteen  tons  each  and  the  following  is  the 
result : 

Number  of  car-loads  via  Canadian  Pacific,  12  months 
of  1887 485 

Number  of  car-loads  via  Canadian  Pacific,  16  months 
to  April  30,  1889 333 

Average  number  of  cars  per  month,  29  ;  per  day,  1. 

Average  number  of  cars  crossing  Detroit  river  (Customs 
Report)  per  day,  1,000  (about). 

I  make  the  comparison  of  "  the  diversion  "  with  the  daily 
traffic  at  this  city  merely  to  give  a  clearer  idea  of  its  insig- 
nificance. The  average  on  west-bound  States  to  States 
traflfio  is  slightly  higher,  but  does  not  merit  further  atten- 
tion. 

The  second  subdivision  of  this  reason  is  the  diversion  of 
transpacific  traffic,  which,  it  is  claimed,  naturally  belongs  to, 
and  but  for  the  Canadian  Pacific  Railway  would  be  carried 
by  the  American  lines.  The  principal  items  composing  this 
traflic  are  tea,  domestics,  and  silk.  I  subjoin  a  table  of  the 
tea  imports  from  Japan  for  fourteen  years  into  the  United 
States  and  Canada  and  the  routes  by  which  they  were  car- 
ried. The  statistics  are  reliable,  and  were  obtained  from 
Messrs.  Smith,  Baker  &  Co.,  one  of  the  oldest  and  most 
influential  American  firms  in  the  tea  trade,  having  houses 
established  in  Yokohama  and  Kobe,  Japan,  and  a  house  in 
New  York  under  the  supervision  of  Mr.  R.  B.  Smith,  the 
resident  partner  there : 


I 
'J. 


39 


Imports  of  Teas  into  United  States  and  Canada  from  Japan,  1875  to  1889,  Inclusive. 


Season. 


1876-'6.. 
1876-'7.. 
1877-*8.. 
1878-'9.. 
1879-'80. 
1880-'!.. 
1881-''2 . 
1882-'3.. 
1883-'4.. 
l884-'5.. 
1885-'6.. 
1880-'7.. 
1887-''8.. 
1888-'9.. 
1889*. . . 


Via  San 
Francisco. 


Via  Van- 
couver. 


13,32  ),946 
11,110.057 
14.448  289 
12.809  728 
17,822,899 
18,317.027 
19.718.806 
12,333  987 
16,.I7,369 
15,589,961 
ig,0t8.0'>2 
21,972,565 
17.414,689 
11,903  814 
14,242,700 


10  322,368 

10,063,761 

9,676,680 

6,175,557 


Via  Suez. 


Sailer  to 
New  Yorlt.' 


Via  Taco- 
ma. 


1,906,2.35 

5.337,980 

6  .'590,617 

12,028,604 

15,092,653 

20  167.157 

14,549,262 

21,668  376 

18,017,876 

19,818,428 

16,730,911 

12,994  .502 

8.779.827 

8,848.056 

11,559,994 


9,980  621 
5,982,3(10 
3.282.708 
1.2 i2  248 
2,881  527 
1,013.776 


532  422 
22,538 


815  951 


248,693 
103,981 


2,998,517 

"'6,840,971' 
9,248,404 
6,862,637 


Total. 


23,210,802 
22,430,887 
23,271,584 
25,500,580 
34,649,479 
39,497,960 
84,288,068 
31,534,785 
34,257,788 
35,408,889 
39  093,401 
45,289.423 
43.099,253 
39,820,047 
37,924,769 


♦(Up  to  November  28, 1889,  from  Yolcotiama.)    New  Yorlc,  January  13,  1890. 

This  tea  "season"  extends  from  June  1  to  May  31  in 
each  twelve  months. 

An  inspection  of  the  table  makes  it  clear  that  "  the  diver- 
sion" can  neither  be  proved  nor  disproved  by  a  comparison 
of  the  quantities  carried  each  season  by  any  line  (Mr. 
Towne's  inetliod),  but  only  by  a  comparison  of  the  percent- 
ages of  each  season's  total  carried  by  any  line,  as  per  follow- 
ing table : 

Table  Showing  PercentaRC  of  Total  Imports  of  Tea  from  Japan  into  the  United 
states  and  Canada,  Carried  via  Various  Routes  at  Dates  Named  Below. 


Season. 


1876-'6 

:882-'3 

1885-'6 

1886-'7 

1887-''8 

1883-'9 

To  November  23,  1889 


5  as 
> 


I. 

> 


529ir^ 

35->i^ 

48^>' 
48^^ 

3i)    ?: 
a7H;t 


i.W 

23i4r^ 


a 

n 

X 

e 
< 

a  a 
o  — 


s 


e 


> 


CO 


o 


56I45; 

5614;; 
58;4!* 

55^rfc 


7^;^ 

62    % 

28)^:i; 
20}4;i 

22M;- 

30    1^ 


3m% 

-mi 


I  100 

100 

100 

23    ;S  i  100 

SKJ)^;,'  ;  100 

ZM'i  1  100 

uH,%  1  100 


The  percentage  via  San  Francisco  and  via  Tacoina  must 
be  added  to  show  the  total  percentage  via  American  lines 
for  comparison  with  any  other  route  or  routes  for  the  given 
season. 


40 

The  percentage  carried  by  the  American  lines  for  the 
"season"  then  in  progress,  which  ended  May  31, 1890,  indi- 
cates, as  shown  by  the  table,  that  the  American  lines  would 
that  "  season  "  carry  a  larger  share  of  the  traffic  than  at  any 
time  since  1875,  both  in  tonnage  and  percentage.  The  irre- 
sistible conclusion  is  that  "the  diversion"  via  the  Canada 
Pacific  rente  has  been  almost  wholly  at  the  expense  of 
British  steamers  and  sailing  vessels,  and  that  the  disastrous 
effect  of  its  competition  claimed  by  the  American  lines  is  a 
pure  myth. 

That  this  statement  is  correct,  is  placed  absolutely  beyond 
controversy,* by  the  following  extracts  from  the  testimony 
in  a  case  tried  before  the  Interstate  Commerce  Commission 
in  June  last.  This  case  is  known  as  the  "  Import  Eate 
Case,"  in  which  I  had  the  honor  to  appear  as  counsel  for 
the  Canadian  Pacific  Railroad  Co.,  which  was  one  of 
twenty-eight  respondents.  The  complainants  were  the 
New  York  Board  of  Trade  and  Transportation,  tlie  Com- 
mercial Exchange  of  Philadelphia,  and  the  San  Franci'sco 
Board  of  Trade. 


Extract  from  testimony  on  pages  193,  194,  and  195  : 

Mr.  Raymond — So  these  figures  are  probably  the  net 
figures.  But  you  say  that  three-fourths  of  the  teas,  anyway, 
that  come  to  the  Pacific  coast  are  Japan  teas  ? 

Mr.  Stubbs  (Vice-president  Southern  Pacific  Railway 
Co.) — That  is  my  estimate — that  about  three- fourths  of  the 
teas  that  pass  through  the  Pacific  coast  are  Japan  teas. 
Northern  Pacific  teas,  I  believe,  are  all  Japan  teas. 

Mr.  Raymond — Do  you  know,  Mr.  Stubbs,  whether  the 
percentages  of  the  totals  received  on  the  Pacific  coast  car- 
ried by  San  Francisco  and  Tacoma  togetlier  have,  relative 
to  the  total  receipts  on  the  coast,  increased  or  decreased  dur- 
ing the  last  three  years? 

Mr.  Stubbs — I  think  they  have  increased,  sir. 


41 


Mb.  Raymond — The  Amei'ican  lines,  then,  have  increased 
their  tonnage  f 

Mr.  Stubbs — 1  think  so  ;  yes,  sir. 

Mb.  Raymond — Do  you  know  anything  about  wliat  the 
percentage  of  increase  has  been  ? 

Mr.  Stubbs — No,  sir  ;  I  have  not  figured  it.  The  increase 
is  slight.  The  reason  for  it  is  that  we  have  been  forced  to 
make  low  rates,  and  the  tea  has  been  diverted  from  Suez  to 
these  lines. 

Mr.  Raymond — Wiiat  has  been  the  course  of  the  per- 
centage of  the  total  brought  via  Vancouver  during  the  last 
three  years  ? 

Mr.  Stubbs — I  do  not  know.     I  have  not  gone  into  that. 

Mr.  Raymond — Then  on  what  do  you  base  your  state- 
ment that  the  competition  of  the  Canadian  Pacific  is  taking 
your  traffic  away  ? 

Mr.  Stubbs — I  gave  you  the  figures  as  to  1 889-90 — one 

year. 

Mr.  Raymond— But  I  am  asking  you  about  percentages 

for  three  or  four  years  previous. 

Mr.  Stubbs— I  say  I  do  not  know,  because  I  have  not 
figured  it  out.     I  did  not  charge  my  mind  with  that. 

Mr.  Raymond— If  it  is  true,  Mr.  Stubbs,  that  the  per- 
centages of  the  total  imports  of  tea  on  the  coast  during  the 
last  three  years  have  increased  via  San  Francisco  and  Tacoma, 
and  have  decreased  at  Vancouver,  then  it  is  not  true,  is  it, 
that  the  Canadian  Pacific  is  diverting  your  traftic  by  cut- 
ting rates  all  to  pieces,  or  that  sort  of  thing  ? 
Mr.  Stubbs-— What  might  be  true— 
Mr.  Raymond— Can't  you  answer  that  question  1 
Mb.  Martin,  counsel  for  the  Southern  Pacific  R.  R.  Co. 
— Let  him  answer  in  his  own  way. 

Mr.  Stubbs— What  might  l)e  true  as  to  last  year  need  not 
be  true  as  to  this  year,  and  what  I  say  as  to  the  Canadian 
Pacific's  doings  today  is  true— exactly  true.  They  are 
doing  just  exactly  what  I  say. 


v; 


42 


CJ 


Testimony  on  page  231 : 

Mr.  Pettit,  counsel  of  Pliiladelphia  Exchange— In  the 
east-bound  business  from  San  Francisco,  as  I  understand 
you,  you  got  a  better  rate  when  you  had  only  the  vessel 
competition  to  meet. 

Mr.  Stubbs— Because  we  were  content  with  a  less  propor- 
tion of  the  total  traffic. 

Mr.  Pettit— As  soon  as  you  wanted  a  greater  proportion 
of  the  traffic,  then  you  had  to  reduce  the  rate  ? 

Mr.  Stubbs— More  lines  came  on,  and  that  necessitated  it. 
We  could  not  keep  our  nroportion.  The  Canadian  Pacific 
came  on,  and  it  mM  ^  -  ome  traffic.  Necessarily  that 
traffic  must  either  cou  .  i.  j...  us  or  from  the  other  competi- 
tors. It  made  the  rat«3  to  get  it.  That  forced  the  rates 
down  by  all  the  lines,  and  :!  ey  ^i>  o.^d  them  low  enough  to 
get  a  good  proportion.  We  have  reiu-ued  o^ir  2)iWortion 
at  lower  rates,  and  they  took  what  they  got,  you  may  say, 
/>'t>m  the  other  coinpetltors. 

Testimony  on  page  167  : 

Mr.  Martin — Tiiis  Suez  route  lias  heretofore  dictated  the 
rate  ? 

Mr.  Stubbs — Always/  Yes,  sir  ^  with  the  exception  of 
the  small  quantity  that  we  were  enabled  to  get  of  the  early 
teas,  on  which  we  arbitrarily  cliarged,  regardless  of  any 
competition,  5  cents  a  pound  before  tiie  Canadian  Pacific 
came  in.  We  were  able  to  get  that  on  one  or  two  cargoes, 
but  after  the  desire  for  quick  transportation  ceased  we  had 
to  follow  them  right  down  to  get  any  share  of  it. 

The  testimony  of  Mr.  Ileiman,  a  tea  merchant  with 
houses  in  Yokohama  and  Hiogo,  Japan,  is  conclusive  as  to 
the  influence  of  the  Suez  route  upon  traffic. 

Page  125 : 

Mr.  Martin — How  do  these  rates  ordinarily  compare 
with  each  other,  the  Suez  by  steamer,  and  rail  across  the 
continent,  and  Suez  by  sailing  vessels? 


43 

Mb.  Heiman— The  Suez  route  is  generally  slightly  the 
cheapest.  Tlie  cause  of  that  is  the  sail  and  rail  via  Tacoma 
to  the  United  States  and  steamer  and  rail  via  San  Francisco 
and  Vancouver. 

Page  128 : 

Mr.  Martin — "What  would  be  the  effect  upon  the  traffic 
across  the  continent  by  steamer  to  the  Pacific  coast  and  by 
rail  from  the  Pacific  coast,  if  we  should  make  any  material 
increase  in  rates  ? 

Mb.  Heiman— "We  would  not  ship  that  way  at  all. 

Mb.  Mabtin — "Would  the  traffic  be  lost  to  the  American 

ships  ? 

Mb.  Heiman—  We  would  give  it  to  Sues.  Sometimes  it 
does  come  that  way.  Last  year  the  steamships  kept  rates  up, 
and  they  lost  a  great  deal  of  cargo  in  consequence.  It  came 
by  Suez. 

Page  129 : 

Me.  Martin— This  rate  on  tea  to  the  Pacific  coast  is  con- 
trolled by  the  rate  made  by  the  Suez  steamers  ? 

Mr.  Heiman—  Yes,  sir  ;  certainhj. 

Mr.  Martin— They  can  carry  it  cheaper  than  the  others, 

can  they  not  ? 

Mr.  Heiman— Except  for  the  first  boat  of  the  season, 
then  the  steamers  get  a  much  higher  rate.  This  year  they 
had  one  cargo  at  3^  cents  a  pound,  hut  directly  the  crop 
comes forwaixl  in  quantity  the  Suez  rate  rides  the  market. 

Page  131 : 

Commissioner  "V^eazt— How  does  it  happen  that  it  costs 
you  $1.50  by  San  Francisco  when  you  could  get  it  at  70 

cents  via  Suez  ? 

Mr.  Heiman— There  is  a  saving  in  time  and  insurance, 
and  probably  they  may  not  keep  their  rate  at  1^  cents ;  it 
may  go  down  in  the  next  week. 

Mb.  Mabtin— This  question  of  rate  becomes  a  question 
of  carriage.  When  they  cannot  meet  this  competition  by 
Sues  the  railroads  then  get  the  trade  ? 


44 


■>'!: 


Mk.  Heiman — Ye8,  sir. 

The  statistics  before  referred  to,  also  justify  the  state- 
ment, that  the  total  tea  tonnage  of  the  Canadian  Pacific  route 
does  not  equal  the  local  Gonsuviption  of  Canada  herself. 
The  annual  average  imports  of  tea  from  China  and  Japan 
into  Canada  for  the  last  five  years  equals  about  19,000,000 
pounds,  of  this  amount  37.40/100  per  cent  comes  through 
American  seaports  and  over  American  railroads. 

American  railroads  claim  serious  damage  from  the  diver- 
sion to  the  Canadian  Pacific  route  of  the  transportation  of 
domestics  or  cotton  goods  to  China  and  Japan. 

The  fact  is  that  the  American  transcontinental  lines  have 
never  carried  any  considerable  tonnage  of  domestics  or  cotton 
goods  for  any  trans-pacific  destination.  I  would  be  glad  to 
have  the  American  lines  produce  any  figures  which  will 
disprove  my  assertion.  Before  the  Canadian  Pacific  route 
was  opened,  the  small  export  trade  in  American  cottons  was 
done  by  rail  from  the  mills  to  Fall  River,  Mass.,  thence  by 
water  to  New  York,  and  thence  to  China  and  Japan  by 
British  vessels,  via  the  Suez  canal.  A  suggestive  and 
instructive  prophecy,  which  is  being  rapidly  fulfilled,  was 
made  by  Hon.  George  F.  Page,  of  Concord,  N.  H.,  \\\  his 
argument  on  behalf  of  the  business  interests  of  New  Hamp- 
shire before  the  railroad  committee  of  the  New  Hampshire 
Legislature,  July  28, 1887,  in  favor  of  the  passage  of  House 
Bill  No.  28.    Mr.  Page  says : 

"On  behalf  of  a  largo  number  of  business  men,  and 
especially  the  manufacturers  in  Merrimac  Valley,  I  desire 
to  submit  a  few  suggestions  for  your  consideration.  I  am 
not  here  in  the  interest  of  any  railroad  corporation  or  of  the 
agent  of  any  railroad  corporation.  What  I  say  to-night  will 
be  said  as  my  own  voluntary  action. 

*  *  *  "Before  the  civil  war,  New  England  had  a 
large  trade  in  cotton  cloth  with  China.  The  war  destroyed 
that  trade,  as  it  did  nearly  all  our  export  business.    England, 


I,   '"  W 


45 


with  her  commercial  enterprise,  seized  the  trade,  and  has 
practically  monopolized  it  since.  Prior  to  the  war,  there 
was  an  open  competition  in  the  Chinese  markets  between 
old  England  and  New  England,  cotton  cloth  being  shipped 
by  both  peoples  aronnd  the  Cape  of  Good  Hope ;  bnt  it 
was  necessary  to  put  it  into  tin  cases  or  otherwise  sealed 
packages  to  protect  the  cloth  from  atmospheric  changes,  for 
without  this  precaution  through  the  long  voyage  throngh 
the  southern  seas  it  would  mildew,  and  therefore  would  not 
arrive  in  a  merchantable  condition.  You  will  remember 
that  before  we  could  recover  our  export  trade  after  the  war, 
England  secured  control  of  the  Suez  Canal,  and  she  has  ever 
since  held  this  cotton  trade  with  China  almost  exclusively 
by  virtue  of  that  fact,  for  in  shipping  through  the  Suez 
Canal  by  steamer,  the  English  manufacturers  are  not  obliged 
to  pack  their  goods  in  tin  cases,  but  they  put  a  kind  of  var- 
nish or  dressing  as  a  coating  over  their  packages,  which, 
while  it  does  not  entirely  exclude  the  air,  does  it  to  a  suffi- 
cient extent  to  protect  the  goods  on  a  short  voyage  through 
a  moist  climate.  These  conditions  have  put  an  embargo 
upon  the  shipment  of  cotton  cloth  in  any  considerable 
amount  from  the  United  States  to  those  markets,  while  the 
amount  of  cloth  shipped  by  English  manufacturers  to  Cliina 
yearly  has  already  reached  400,000,000  yards  and  to  Java 
100,000,000  yards.  That  trade  belongs  to  New  England, 
and  may  he  recovered,  at  least  in  part^  if  not  entirely,  hy 
New  Enoland. 

'"  With  the  completion  of  the  Canadian  Pacific  Railway 
and  the  putting  on  of  a  regular  line  of  steamers  from  Van- 
couver to  Shanghai  and  Hong  Kong,  the  way  is  open  to 
this  consummation,  provided  we  can  make  proper  connec- 
tions with  that  road.  By  this  route,  cotton  goods  can  be 
shipped  from  New  England  even  without  the  expense  of 
the  dressing  which  the  English  manufacturers  apply  to  their 
packages  shipped  through  the  Suez  Canal.     Instead  of  that, 


46 

we  can  ship  the  cloth  in  ordinary  bales  or  boxes,  because, 
the  voyage  being  a  short  one  and  wholly  in  a  northern  lati- 
tude, the  condition  of  the  goods  upon  arrival  will  be  the 
same  as  when  they  left  the  factory. 

"  The  time  required  for  the  shipping  of  the  goods  from 
the  New  England  mills  to  Shanghai  is  about  thirty  days  ; 
the  time  from  England,  via  the  Suez  Canal,  is  about  fifty- 
three  days.  Some  one  may  say  that  England  may  ship  her 
cloth  across  the  Atlantic  and  thence  over  the  Canadian  route 
to  Shanghai ;  but  suppose  she  does.  The  raw  cotton  must 
be  taken  across  the  Atlantic  and  the  finished  goods  returned, 
and  both  the  expense  and  time  are  against  the  English 
manufacturer.  So  it  is  that,  while  New  England  has  not 
been  able  in  the  past  successfully  to  compete  with  old  Eng- 
land, with  this  proposed  transportation  system  completed, 
old  England  cannot  successfully  compete  with  New  England. 

"This,  gentlemen,  is  no  picture  of  the  imagination,  for 
while  we  discuss  this  question  here,  a  train  of  twenty  cars  is 
on  its  wav  with  fifteen  hundred  bales  of  cotton  cloth  for 
Japan  and  China.  That  train  passed  up  through  the  Merri- 
mac  Valley,  thence  over  the  Canadian  Pacific  Railway  to 
Vancouver,  from  which  points  these  goods  will  be  taken  by 
steamer  to  Yokohama  and  Shanghai.  To-night  a  vast  com- 
merce has  its  birth,  for  China,  as  if  impatient  of  delay  and 
unwilling  to  await  the  slow  process  of  legislation,  but  antici- 
pating what  that  legislation  is  to  be,  reaches  out  her  hand 
and  bids  New  England  '  welcome.'" 

A  year  ago  while  I  was  in  the  office  of  the  Canadian 
Pacific  Steamship  Company,  in  New  York,  an  agent  of  one 
of  the  New  England  mills  called  for  the  purpose  of  obtain- 
ing a  rate  on  1,000  cases  of  twills  to  Bombay.  This  simple 
fact  speaks  volumes,  indicating  as  it  does  that  by  means  of 
this  foreign  railway  corporation,  America  may  yet  market 
her  domestic  manufactures  among  the  teeming  millions  of 
Britain's  own  India.    In  view  of  these  facts,  how  can  your 


47 

honorable  committee  heed  the  complaints  of  American 
trans-continental  lines  which  have  never  been  willing  to 
make  any  rates  by  which  New  England  could  be  aided  in 
securing  this  business  ? 

As  to  the  item  of  raw  silk.  It  is  true  that  the  Canadian 
Pacific  Railway,  by  means  of  special  silk  express  trains  and 
groat  energy,  has  diverted  from  American  lines  a  portion  of 
the  traffic  which  was  wholly  their  own.  The  extent  of  the 
diversion  is  shown  by  the  foilowing  table: 

Impoits  of  Raw  Silk.  May  1,  1888,  to  March  37,  1889. 
American  lines. 

Via  Pacific  Mail  '^^eamship  Company 8,521  bales. 

"     Occidental  and  Oriental  Steamship  Com- 
pany    '^'^^* 

"    Canadian  Pacific  Steamship  Company...  3,353     " 

Total 19,728  bales. 

Proportion  of  Canadian  Pacific,  17  per  cent. 


Third  Reason— Local  Takiffs. 

In  order  to  intelligently  consider  this  reason  I  have 
caused  to  be  compiled  from  the  books  of  the  Grand  Trunk 
Railway  Company  and  from  the  books  of  the  Canadian 
Pacific  Railway  Company  the  local  tariffs  in  force  m  1889  on 
certain  staple  articles  of  freight  for  distances  from  five  miles 
to  four  hundred  miles  inclusive.  The  comparison  is  made 
with  the  rates  in  force  at  the  same  time  upon  twenty  Ameri- 
can railroads  for  the  same  articles  of  freight  for  the  same 

distances. 

The  articles  of  freight  are  as  follows : 

Flour  and  wheat 

Iron 

Sugar.  _ 


r 


48 

Boots  and  ehocs. 

Agncultiirnl  implements. 

Suit. 

Lumber. 

Hardware  (N.  0.  S.*) 

It  will  be  noted  that  on  the  article  of  salt  the  comparison 
is  made  with  seventeen,  but  on  all  other  articles  with  twenty 
railroads.     The  names  of  the  American  railroads  are : 

Northern  Pacific. 

Southern  Pacific. 

Pennsylvania. 

Illinois  Central. 

Chicaoro,  Milwaukee  &  St  Paul. 

Boston  &  Lowell. 

Chicago  &  Northwestern. 

Chicago,  St.  Paul,  Minneapolis  &  Omaha. 

Chicago  tS'  Alton. 

Chicago,  S'l.  Paul  &  Kansas  City. 

Chicago,  Kansas  &  Nebraska. 

Chicago,  Burlington  &  Quincy. 

Deleware,  Lackawanna  &  Western. 

Hannibal  &  St.  Joe. 

Minneapolis,  St  Paul  &  Sault  St.  Marie. 

New  York  &  New  England. 

Passu  mpsic. 

Toledo,  Ann  Arbor  &  North  Michigan. 

Wabash. 

Cincinnati,  Jackson  &  Mackinaw. 

I  subjoin  a  table  showing  the  comparison  iti  extenao  of 
the  Canadian  lines  with  the  first  four  American  lines  men- 
tioned, selecting  the  two  highest  and  two  lowest.  The  tariffs 
of  the  remaining  sixteen  lines  I  have  filed  with  the  Com- 

(*Not  otherwise  specifled.) 


40 

mitieo  on  Intoratate  Cominorco  for  tho  voriflcation  of  my 
lumiysisand  oonolusion.  Tlio  Canadian  linos  sliow  two  local 
tariffs,  mileage  and  special,  tho  former  being  used  in  small 
station  to  station  business  where  volumo  of  tratHc  is  email 
and  non-competitive,  the  special  being  ap'plicable  to  all  sta- 
tions of  any  considerable  size  or  importance. 

A  careful  comparison  of  the  Grand  Trnnk  tariffs  with 
those  of  the  Canadian  Pacific  shows  very  little  difference, 
the  latter  being  slightly  the  lowest,  so  that  the  conclusions 
favorable  to  the  Grand  Trunk  are  even  more  so  to  itsCana- 
dian  rival. 


TuovH  AND  Wheat— In  Car- Loads  lo  OenU  per  100  Lbi. 


0.  T.  R. 

C.  F 

'.  R. 

N.  Pac. 

S.  Pac 

Pa.RR. 
Local. 

ni. 

Cen. 

1 

MUease. 

., 

Special. 

Mileage. 

Special. 

Local. 

Local. 

Local. 

n 

3 

4 

3 

3 

4 

5 

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7 

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50 


Iron— 

In  Car-Loads  in  Cents  per  100  Lb 

s. 

' 

i 

Q.I 

.R. 

C.  P.  R. 

N.  Pac. 

S.  Pac. 

Pa.R.R. 

111. 
Oen. 

Mileage. 

Special. 

Mileage. 

Special.      Local. 

Local. 

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5 
10 

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4 
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4 
5 
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SCOAR- 

-In  Car-Loads  in  Cents  per  100  Lbs. 

i 

G.  T.  R. 

c.  r 

.  R. 

N.  Pac. 

S.  Pac. 

PaR.R 

111. 
Gen. 

s 

Mileage. 

Special. 

Mileage. 

4 

5 
6 

Special.       Local. 

Local. 

Local. 

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4 
5 
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51 


Boots  and  SRosa— Iq  Less  than  Car-Loads  ia  Cents  per  100  Lbs. 


1 

G.T 

1 

.R.     ! 

C.  F 

.  R. 

N.  Pac. 

S.  Pac. 

Pa.R.R. 

III. 
Cen. 

1 

i 
MileaRe. 

Special. 

MileaKe. 

8 

.  10 

12 

Special. 

Local.  I 

Local. 

Local. 

Local. 

6 
10 
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8 
10 
12 

10 
14 
17 

4 

7 

11 

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9 

14 

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12 

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14 

12 

14 

12 

20 

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18 

15 

18 

15 

25 

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20 

16 

20 

16 

27 

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16 

22 

16 

30 

30 

16 

18 

45 

24 

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24 

16 

32 

35 

18 

19 

50 

24 

18 

24 

lb 

34 

37 

20 

20 

75 

80 

20 

80 

20 

44 

55 

26 

22 

100 

36 

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36 

22 

54 

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29 

24 

195 

38 

22 

38 

22 

60 

93 

32 

28 

150 

40 

22 

40 

22 

64 

112 

34 

32 

175 

44 

22 

44 

22 

70 

130 

38 

36 

900 

46 

24 

46 

21 

74 

150 

42 

40 

-960 

52 

28 

52 

28 

84 

168 

48 

48 

BOO 

60 

28 

60 

28 

01 

187 

51 

56 

850 

66 

30 

66 

30 

104 

200 

58 

58 

400 

TO 

40 

70 

1 

31 

114 

200 

61 

61 

AoRicuLTOBAL  IMPLEMENTS— Iq  Car-Loads  in  Cents  per  100  Lbs. 


G.  T.  R. 


C.  P.  R. 


III. 


N.  Pac.  S.  Pac.; Pa.R.R.   cen. 


a      Mileage.   |    Special.       Mileage. 


6 
10 
15 

4 

5 

4 

5 

6 

6 

90 

6 

6 

95 

7 

6 

7 

80 

8 

7 

8 

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9 

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11 

7 

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11 

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14 

9 

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16 

10 

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125 

17 

10 

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150 

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20 

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200 

21 

11 

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24 

18 

24 

300 

30 

18 

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JiMf 

81 

14 

81 

400 

38 

18 

33 

1 

Special.     Local.    Local.  |  Local.  Local. 


9 
10 
12 
13 
13 
13 
13 
13 
14 
18 


4 
6 

7 
8 
9 
10 
11 
\2 

14 
18 
22 
24 
26 
27 
30 
34 
38 
42 
46 


4 
6 
10 
14 
17 
21 
21 


aw 
32 

7« 

86 

7H 

51 

10  i 

72 

12  ' 

90 

13 

109 

14 

110 

15 

110 

16^ 

no 

18 

no 

20 

11  > 

21 

v.o 

22« 

52 


Salt— In  Car- Loads  In  Cents  per  100  Lbs. 


•i  I 


G.  T.  R. 

C.  P.  R. 

N.  Pac. 

S.  Pac.  Pa.R.R. 

111. 
Cen. 

1 

i 

Mileage. 

Special. 

Mileagre. 

Special. 

Local 

i 

Local.  Local. 

Local. 

6 
10 

3 

3 

3 

ayi 

4 

ii| 

4 

4 



4 

6** 

5 

IS 

4 
5 
5 

4 

5 
5 

4 

6 

5 
0 
Q 

3Vd 

SO 

3M 

96 

f* 

80 

6 
6 

6 
6 

5 
5 

5 
6 

10 

6 
6 

85 

4 

40 

7 

7 
7 

7 
7 
7 

6 

6 

7 
8 

11 

6 

7 

g 

4A 

no 

IsSt    7 

75 

10 

8 

10 

7 

11 

18^ 

9 

5 

100 

11 

9 

11 

8^ 

13 

25 

lOJiJ 

6p 

186 

13 

10 

13 

0 

15 

30 

11 

160 

14 

10 

14 

10 

16 

35 

12 

175 

15 

10 

15 

IC 

18 

40 

13 

7i2 

SOO 

16 

11 

16 

11 

19 

45 

!SS 

7^ 

S50 

18 

12 

18 

12 

2t 

50 

11^ 

800 

80 

13 

20 

12« 

83 

55     Uii 

850 

22 

14 

22 

14 

22 

60 

17 

400 

24 

15 

24 

15 

27 

65 

18« 

Lumber— In  Car-Loads  in  Cents  per  100  Lba. 


G.  T.  R. 


5 

3 

10 

4 

IS 

4 

80 

5 

85 

5 

80 

6 

86 

6 

40 

7 

45 

7 

50 

7 

75 

10 

100 

11 

18S 

13 

180 

14 

m 

15 

800 

16 

860 

18 

800 

20 

850 

82 

400 

■   24 

C.  p.  R. 


g  I    Mileage.  |    Special.        Mileage. 


3 

3 

m 

4 

4 

4 

4 

6 

5 

5 

5 

6 

ss 

6 

4 

6 

7 

G 

7 

8 

10 

9 

11 

9\i 

13 

10 

14 

10 

15 

11 

16 

12^ 

18 

14 

20 

15« 

22 

17 

24 

Special. 


3^ 

4 

4 

5 

5 

6 
6 
8 
9 

1^ 

10 

11 

\f 


N.  Pac.;  8.  Pac.  Pa.R.R. 


Local.    Local.    Local. 


3 

3^ 

4 

6 
6^' 

7- 
9Ji 

1^^ 

14 

15! 

16] 

19 

21 « 

34 

26^ 


3 
4 

5 

8| 

8' 

8Ji 

9 


11 
15 

18! 

82: 

26 
30 
35 
40 
46 
£0 


4 

6 
5 
6 
6 
6 
6 
6 
7 
7 
9 
10^ 

12 
13 

\^ 
,.« 

18« 


111. 
Cen. 


Local. 


I'  !'^ 

1 1 


53 


Hardware  (N.  O.  8.)— Less  than  Car-Loads  In  Cents  per  100  Lbs. 

C.  P.  R.  N.  Pac.  8.  Pac.  Pa,R.R.|  c^ 


0.  T.  R. 


a 


6 

10 

15 

30 

25 

30 

35 

40 

45 

50 

76 

100 

126 

150 

176 

aoo 

260 
300 
850 
400 


Mileage. 


Special.    I   Mileage. 


Special,    i  Local.  \  Local.    Local.  Local. 


8 
11 
12 
14 
16 
18 
19 
21 
21 
26 
32 
33 
35 
39 
40 
46 
63 
68 
61 


11 

11 

12 

13 

14 

14 

14 

14 

18 

18 

19 

19 

19 

21 

25 

25 

26 

35 


7 
8 
11 
12 
14 
16 
18 
10 
21 
21 
26 
32 
33 
35 
89 
40 
46 
53 
58 
61 


11 

11 

12 

13 

14 

14 

14 

14 

18 

18 

23 

25 

25 

25 

25 

25 

26 

35 


0 
12 
14 

17 
19 
21 
23 
26 
2!' 
29 
37 
46 
51 
54 
60 
63 
71 
80 
88 
07 


4 
7 
11 
16 
18 
22 
25 
30 


6 

6 
0 
9 
10 
11 
12 
13 


09 

37 

16  ' 

55 

20 

75 

28  i 

93 

26  ! 

112 

29 

130 

32  ■. 

150 

36 

168 

41 

170 

46 

170 

50 

170 

58 

12 

13^ 
14 

14^ 

15 

15V6 

16 

16^ 

17 

18% 

22^1 

25a 

279| 

30^ 

35 

40 

42^ 

45 


I  have  compared  each  of  the  Grand  Trunk  local  tarififs 
with  the  tariff  of  each  American  railroad,  making  314  com- 
parisons, in  133  of  which  the  average  of  both  the  Canadian 
mileage  and  special  tariffs  are  higher  and  in  181  compari- 
sons lower  than  their  American  competitors,  as  per  the  fol- 
lowing table  : 

Analysis  of  comparisons  of  Grand  Trunk  Local  Tariffs.  Mileage  and  Special,  with 
ThoM  of  Twenty  American  Railroads  (Except  on  the  Item  of  Salt,  when  the  Com- 
parison is  with  Seventeen). 

Flour  and  (  Q.  T.  mileage  higher  than    15,  lower  than     5,  total  of  ag 

wheat.     1     ''     special  "  6,  ^_  i*.       ..      •■;;;:::;.    20 

t     *'     mileage  J'J.  ,,  /,'       ..  20 

t     "     mileage  14.  ir        ••  20 

sugar....  ]  »  gpecial       -       4.      ;;       6,    ..    ■•..;;::::•.:  55 

Boots  and]  "  mileage                         10,  „            }"-       „           ^ 

shoes.      1  "  special                            1.                       ^^'  • 

Agricultu-|  ..  n,„eage  "             9,  *;.            11,       ..      ^ 

ral     im-V  ..  gpedal  "             1,                      ^^<              ^" 

plements)             ""^  ,,            .„  „             7        >•       17 

^" I     "     special  6.  ..  li'       ..  20 

u  i     "     mileage  1^,  ''       ..  20 

Lumber..    -J     ..     special  ;;  9.  [[  J'       ..       •••••.:;:::::    20 

„     J            (     "      mileage                          10.           „            on        "        "  20 

Hardware]     ..     gpgci^i  "  j),  20,  _^ 

Average "  ^si         "  m       "  314 

Or,  in  other  words,  the  average  of  both  mileage  and  spe- 
cial Grand  Trunk  tariffs  is  Idlper  cent  less  than  American 
local  tariffs. 


I: 


54 

A  fairer  comparison  would  be  between  the  Grand  Trunk 
special  and  American  local  tariffs,  in  which  the  result  would 
be  as  follows :  Grand  Trunk  higher  than  39,  lower  than  118, 
total  of  157 ;  or  in  other  words,  the  Grand  Trunk  special 
tariff  is  34:  pe?'  cent  less  than  American  local  tariffs. 

The  relative  cheapness  of  Grand  Trunk  local  rates  is  not 
the  result  of  a  new  policy,  but  has  prevailed  for  many  years,^ 
as  proven  by  the  following  table,  which  shows  a  comparison 
in  1875  of  the  local  rates  of  the  then  five  great  trunk  lines 
of  railway.  The  data  for  this  table  were  furnished  by  J.  L. 
Ringwalt,  Esq.,  editor  of  "The  Railway  World,"  published 
at  Philadelphia,  Pa.,  and  are  found  on  page  254  of  his  book,, 
entitled  "Development  of  Transportation  Systems  in  the 
United  States : " 


■fl 


55 


Miles  from  fclven  point  to  station 
nearest  the  distance  taken. 


Kind  of  Freight. 


1st  Class. 


For  50  miles : 

Erie 50.. 

New  York  Central 55. 

Pennsylvania 50.. 

Grand  Trunk 55.. 

Baltimore  &  Ohio 50.. 

For  75  miles : 

Erie ; 75.. 

New  York  Central <4. . 

Pennsylvania Xt ' " 

Grand  Trunk 75.. 

Baltimore  &  Ohio 75.. 

For  100  miles : 

Erie lOO  • 

New  York  Central 101 . . 

Pennsylvania ijJO.  • 

Grand  Trunk J^-- 

Baltimore  &  Ohio 100. . 

For  150  miles  : 

Erie 153.. 

New  York  Central 156. . 

Pennsylvania 150. . 

Grand  Trunk 150  • 

Baltimore  &  Ohio 158.  • 

For  200  miles : 

Erie 200.. 

New  York  Central 199.. 

Pennsylvania *00. . 

Grand  Truuk 203.. 

Baltimore  &  Ohio 201. . 

For  250  miles  : 

Erie 248., 

New  York  Central 263., 

Pennsylvania 260. 

Grand  Trunk 250. 

Baltimore  &  Ohio 253. 

For  303  miles : 

Erie 300. 

New  York  Central 30). 

Pennsylvania 300. 

Grand  Trunk 300. 

Baltimore  &  Ohio aOO. 

For  350  miles : 

j<l>{g 351 . 

New  York  i'entral 3*9 

Pennsylvania ^^■ 

Grand  Trunk ^9"- 

Baltimore  &  Ohio 350. 


22 
24 

19 
28 
20 


2d  Class. 


17 
21 
16 
23 
20 


3d  Class. 


12 
IB 
14 
19 
19 


4th  Class. 


9 

9 

11 

14 

16 


27 

21 

15 

11 

26 

23 

19 

13 

25 

21 

18 

15 

30 

25 

20 

15 

30 

30 

25 

23 

34 

26 

19 

14 

33 

28 

25 

15 

30 

25 

20 

15 

36 

30 

24 

18 

40 

40 

34 

30 

45 

34 

24 

19 

48 

42 

36 

22 

44 

37 

33 

26 

44 

37 

29 

22 

61 

50 

42 

36 

5)5 

42 

30 

23 

61 

50 

40 

24 

66 

56 

46 

36 

64 

45 

36 

27 

72 

59 

52 

40 

67 

50 

36 

28 

65 

53 

49 

28 

71 

56 

46 

£6 

W  , 

50 

40 

JO 

95 

73 

60 

40 

78 

59 

43 

33 

70 

55 

51 

31 

71 

56 

46 

36 

60 

50 

40 

30 

95 

80 

60 

40 

i 

86 

66 

47 

38 

76 
71 

60 
56 

50 
46 

34 

36 

70 

58 

47 

35 

95 

80 

60 

40 

1 

The  following  analysis  of  the  above  table  is  based  on 
fourth-class  freight  alone  as  a  saving  of  time  and  space.  A 
comparison  of  the  other  three  classes  of  freight  would  give 
equally  or  even  more  favorable  results.  .  It  will  be  noted 
that  the  name  of  the  Baltimore  &  Ohio  Eailroad,  like  that 


5G 


of  Abon  Ben  Adetn,  "  leads  all  the  rest  "  in  higli  rates  in 
1875,  as  that  of  the  Southern  Pacific  Railroad  does  in  1890 : 

Comparisons  of  Local  Bates  on  Fourth-Class  Freight  of  the  Grand  Trunk  Railway 
Company  in  1875  with  those  of  Four  American  Trunic  Lines. 


Distances. 

50 

miles. 

75 

100 

160 

200 

250 

300 

850 

Qrand  Trunk  higher  than     1,  same  or  lower  than    3.  or  total  of 


Qrand  result • 12, 


8. 
1. 
3, 
2. 
2, 
4. 
_3, 

20, 


4 
4 
4 
4 
4 
4 
4 
4 

32 


Or  in  other  wordd  tlie  Grand  Trunk  locil  tariff  in  1875 
was  ttoenty  per  cent,  less  than  its  trunk  line  competitors. 

I  have  filed  with  the  Senate  Committee  on  Inter-State 
Commerce  local  freight  tariff  No.  99  of  the  Canadian  Pacific 
Railway,  put  into  effect  February  1,  1888,  and  covering  all 
local  traffic  between  Winnipeg  and  Vancouver.  This  ter- 
titory  is  absolutely  free  from  all  competition  by  either  rail 
or  water,  and  the  traffic  is  wholly  dependent  upon  the  Can- 
adian Pacific  Railway;  yet  for  tliat  long  distance  of  1,483 
miles  the  rates  are  as  carefully  adjusted  to  the  long-and- 
short-haul  clause  of  our  interstate  law  as  by  any  American 
road.     I  select  a  few  examples  from  this  tariff : 

Classes  of  Freight. 

123456789       10 

Winnipeg  to  Aikins,  505  miles 151    127    102     77      70      57      39      30     57      33 

Winnipeg  to  Golden,  1,007  miles 345    294    161    124    114      97     68      58     95)^50 

^ 'innipeg  to  Vancouver,  M83  miles    337   281    225    169    156    140    102     83    136     83 

Tlie  faciiedule  shows  111  stations  between  Winnipeg  and 
Aikins,  but  not  one  of  them  pays  a  higher  rate  than  as 
shown  above.  There  are  168  stations  between  Winnipeg 
and  Golden,  219  stations  between  Winnipeg  and  Vancouver, 
but  no  intermediate  station  pays  more  than  the  long-haul 
rate.  Many  of  these  stations  are,  of  course,  only  flag  sta- 
tions, but  tlie  principle  of  the  long-and-short-h;iul  clause  of 
our  law  is  rigidly  applied,  while  on,  the  American  transconti- 
nental lines  this  pi'inciple  is  not  applied.  I  select  a  single 
example  from  the  transcontinental  tariff: 


57 

Coal  oil  from  Pittsburgh  or  Buffalo  to 

Pacific  coast  terminals  only ....  $1  05  „^,.  .^^  ,, 

Coal  oil  from  Pittsburgh  or  Buffalo  to  in  '     '''  '''' 

termediate  points  east  of  97th    me- 
•        ''^''''    $1.95     "     .«     » 

These  rates  can  be  found  on  pages  37  and  10,  respectively, 
o  the  west  bound  transcontinental  tariff  now  in  force. 
Tins  tariff  also  discloses  that  substantially  the  lowest  rate 
on  any  American  traffic  from  Minneapolis  to  Pacific  coast 
IS  99  cents  per  100  lbs.,  while  the  lowest  class  rate  for  simi- 
lar  Canadian  traffic  for  practically  the  same  distance,  as  per 
Tariff  No.  99,  is  only  83  cents  per  100  lbs. 

As  confirmatory  of  the  relatively  lower  gross  earnings  of 
the  Canadian  railways,  1  submit  the  following  table,  com- 
piled from  the  Second  Annual  Report  on  the  Statistics  of 
Railways  in  the  United  States  to  the  Interstate  Commerce 
Commission  for  the  year  ending  June  30,  1889,  from  page 

Total  Traffic  Earnings  per  Train  Mile  in  Dollars  and  Fractions 

of  a  Dollar. 

Canadian  Pacific ^^  2^2 

New  York  Central  &  Hudson  Biver  Railroad     .  1593 

Korthern  Pacific ; ^^qq 

Pennsylvania  Railroad . '. .......*.."     i  707 

Southern  Pacific l'gj3 

!^"^*^»  p««ifi« '."■■.■.■.■.■..■■.■.;.■.;;;;  2:050 

Chicago  &  Grand  Trunk j  153 

Michigan  Central 1.352 

Lake  Shore  &  Michigan  Southern 1.632 


58 


(( 


u 


a 


n 


a 


a 


(i 


Fourth  Reason.— Lower  Cost  of  Operation  of  Canadian 

Railroads, 

The  following  table  compiled  from  the  Second  Annual 
Report  on  the  Statistics  of  Railways  in  the  United  States, 
etc.,  referred  to  above,  pages  354  to  384,  proves  this 
"  reason  "  to  be  without  foundation. 

Percentage  of  Operating  Expenses  to  Operating  Income. 

Canadian  PaciHc 65.52  per  cent. 

New  York  Central  &  Hudson  River  Rail- 
road  64.50 

Pennsylvania  Railroad 68.11 

Northern  Pacific 60.37 

Southern  Pacific 67.44 

Union  Pacific 56.51 

Chicago  &  Grand  Trunk 73.27 

Michigan  Central 70.54 

Lake  Shore  &  Michigan  Southern 63.02 

Also  the  following  table,  compiled  from  the  same  source, 
pages  398  to  448 : 

Cost  to  the  Following  Railways  of  CarrviuK  One  Passenger  One  Mile  and  of  Moving 
One  Ton  of  Freight  One  Mile. 

CSanadiau  Pacific Passenger, 

New  Yorlt   Central  &   Hudson  River 

Railroad 

Pennsylvania  Railroad " 

Northern  Pacific " 

Southern  Pacific  (Pacific  system) " 

Union  Pacific " 

Chicago  &  Grand  Trunk " 

Michigan  Central " 

Lake  Shore  &  Michigan  Southern " 

The  net  earnings  of  the  Canadian  Pacific  may,  however, 
be  relatively  greater  than  its  leading  competitors,  owing  to 
its  lower  capitalization  and  fixed  charges,  as  shown  by  the 
following  tables.  Both  its  American  and  Canadian  patrons 
are  surely  entitled  to  the  benefit  of  its  honest  and  economi- 
cal construction.  These  tables  are  compiled  from  the  same 
annual  report  of  railway  statistics  previously  cited,  pages 
212  to  265  and  pages  398  to  448  : 


1.49  cents ;  ( 

reight 

.639  cents 

1.28    " 

.549      " 

1.56    'i 

.486      " 

1.61     " 

.910      " 

1.64    " 

.829      " 

t.83    " 

.618      " 

1.41     " 

.41      " 

1.92    " 

.49      " 

1.70    " 

.43      " 

59 

Amount  of  railway  capital  per  mile  of  line  operated  at  the  close  (  f  the 
year  ending  June  80,  1889. 

Canadian  Pacific 36,002  dollars 

Northern  Pacific 81,986     " 

Southern  Pacific 48,550     " 

Union  Pacific 109,478     " 

Percentage  of  total  expenditures  covered  by  fixed  charges  of  the 
Transcontinental  lines. 

Canadian  Pacific 28.90  per  cent 

Northern  Pacific 39.14       " 

Union  Pacific 35.86       " 

Soiitliern  Pacific 34.91       " 

Food  for  thought  concerning  the  capitalization  of  Ameri- 
can transcontinental  lines  is  found  in  the  following  remarks 
of  Mr.  C.  P.  Huntington  before  the  house  committee  on 
Pacific  railroads,  before  referred  to  : 

"  I  don't  like  to  talk  about  it ;  but,  if  obliged  to,  the  Cen- 
tral Pacific  could  build  a  line  connecting  with  the  Union 
Pacific  and  replace  the  subsidised  section  at  one-quarter  the 
cost  of  that  section,  and  without  Government  aid^ 


Fifth  Reason — Differential  Rates  Granted  Canadian 

Railroads. 

This  reason  has  absolutely  no  force,  from  the  fact  that 
differential  rates  are  now  and  always  have  been  freely 
granted  to  numerous  American  railroads  by  the  standard 
lines,  like  the  V^anderbilt  and  Pennsylvania  systems.  It  is 
merely  a  device  for  equalizing  the  disadvantages  of  greater 
length  of  line  between  same  points,  poorer  equipment,  less 
convenient  terminal  facilities,  lack  of  dining  car  or  restau- 
rant privileges,  etc. 

If  all  hotels  had  strictly  first-class  appointments,  prices 
would  be  uniform  ;  but,  as  many  of  them  are  of  a  lower 
class,  they  attract  patronage  by  lower  prices. 


GO 

Railroads  follow  precisely  the  same  course,  whether  they 
are  American  or  Canadian,  with  the  exception  that  the 
lower  prices  are  fixed  by  the  consent  and  agreement  of  the 
first-class  lines. 

Present  standard  rates  from  New  Class. 

York  to  Chicago.  Ist       9d        3d        4th       6th      6th 

Freight  traffic    75        65        60        36         80        26c.  per  100  lbs. 

DifTerentials  allowed  the  National 

Dispatch 10  8  0  4  4  3  " 

Kanawha  Line 15         12  9  0  6  4 

New  Yorlt,  Ontario  &  Western..      8  B  4  3  2}^       2  " 

The  West  Shore.  Erie,  Delaware, 

Lackawanna  &  Western,   and 

Lehigh  Valley 5  4  3  8  1  1 

Present  standard  rates  from  Chicago  to 

New  York.  1st  class.  iid  class. 

Passenger  traffic 20  dollars.  17  dollars  per  ticket. 

Differential  allowed  Wabash,  Chicago 

&  Grand  Trunk,  Chicago  &  Atlantic, 

Nickel-Plate,  and  Baltimore  &  Ohio.       2  dollars.  1  dollar  per  ticket. 

The  above  differential  is  allowed  only  when  route  is  made 
in  connection  with  the  Erie,  We.st  Shore,  Lackawanna, 
Ontario  &  Western,  and  Lehigh  Valley.  All  of  these  are 
American  railroads. 

Between  Boston  and  Chicago,  the  Boston  &  Albany 
railroad  rates  are  the  standard  ones,  and  differentials  are 
allowied  other  lines  both  on  freight  and  passenger  traffic. 
The  following  item  in  the  New  York  Herald  of  Februarv 
2,  1890,  explains  itself  : 

"The  dispute  over  through  rates  between  the  Boston  & 
Albany  and  Fitchburg  roads  has  been  settled  by  arbitra- 
tion. The  Fitchburgh  road  has  been  awarded  a  differential 
of  two  dollars  on  each  first-class  passenger  by  the  West 
Shore  route,  and  three  dollars  by  the  Erie  route." 

The  distance  from  Vancouver  to  San  Francisco  is  800 
miles,  and  the  only  means  of  communication  for  the  Cana- 
dian Pacific  Railway  is  one  steamer  per  week. 

This  is  a  disadvantage  in  point  of  time  of  four  or  five 
days,  whicii,  by  consent  and  agreement  of  all  the  transcon- 
tinental lines,  is  equalized  to  the  Canadian  Pacific  route  as 
follows,  as  per  transcontinental  tariff,  October  1,  1889 : 

"The  rates  to  San  Franoiscy  only  from  points  named 


61 

below  via  tlie  Canadian  Pacific  railway  will  bo  the  follow- 
ing differentials  in  cents  per  100  lbs.  less  than  the  through 
rates  shown  above :  " 

Olasaea  of  Freight. 

From-  1       28       45       ABODE 

St.  Paul  and  MInneapolia  15     13     10     10     lo      8      8      7      5       & 

Cbica^ro,  Milwaukee,   and  common 

polnta   17^6  14Ji  18     10     10       8       8       7       5       5 

Cincinnati,    Detroit,   and    common 

points    31      17      14      11      11       9       9       7       5       5 

Pittsburgh,   Buffalo,    and    common 

points 28      18      15      18      18      10^  lOW    8       7       5 

New     Yorif,    Boston,    Philadelphia,  ^ 

Baltimore,  and  common  points....    88     81     17     14     14     18     18       8       8       5 

The  differential  on  passenger  traffic  is,  I  think,  five  dol- 
lars per  ticket. 

It  will  be  noted  that  the  differentials  above  given  apply 
to  San  Francisco  only,  the  rates  to  all  other  Pacific  coast 
points  being  precisely  the  same  via  Canadian  Pacific  as  via 
other  routes. 

The  Canadian  Pacific  Railway  did  not  make  a  rate  on 

American   business  south  of  the   international    boundary 

until  after  it  was  discovered  that  contracts  were  being  made 

and  rates  quoted  for  British  Columbia  traffic  via  Puget's 

Sound  by  its  American  rivals.     This  naturally  and  instantly 

provoked   retaliation   and  forced  the  Canadian  Pacific  to 

attack  its  competitors  by  seeking  American  traffic  at  Puget's 

Sound  and  San  Francisco.     The  original  purpose  and  policy 

of  the  Canadian  Pacific  is  clearly  shown  by  the  following 

letter : 

Canadian  Pacific  Railway  Company, 

Montreal,  Sth  December,  1885. 

T.  F.  Oakes,  Esq  ,  Vice-President  Northern  Pacijw  Railroad,  St.  Paul, 
Minn.: 

"  Deak  Sir— Our  line  will  be  open  for  through  traffic 
between  Eastern  points  and  the  Pacific  coast  in  May  next. 

"  We  wish  as  soon  as  possible  to  consider  the  question  of 
through  freight  and  passenger  tariffs.  We  desire  to  make 
the  least  possible  disturbance  in  existing  through  rates  and 
to  co-operate  with  the  existing  lines  in  the  preservation  of 


02 

paying  tariffs.  To  this  end  I  will  loglad  if  you  will  liave 
sent  m  the  fullest  possible  information  as  to  your  present 
rates,  both  regular  and  special,  including  rates  on  fish,  fruit, 
etc.,  carried  on  express  trains  or  under  special  conditions  as 
to  time,  etc.  So  far  as  possible,  we  wish  to  adopt  your 
existing  rates,  and  should  there  bo  any  cases  in  which  cir- 
cumstances will  prevent  our  doing  this  we  will  communicate 
with  you  on  the  subject  before  taking  any  action. 
Yours  truly, 

"  (Signed)  ^V^  C.  Van  Horn, 

Vice-PreHiilent, 


iri 


Sixth  Reason — Destruction  of  Revenues  of  American 

Lines. 

If  the  Canadian  railways  are  diverting  a  large  vohune  of 
traffic  from  their  American  rivals  U!ider  the  operation  of 
the  Interstate  Commerce  Act  as  is  persistently  claimed,  the 
truth  of  the  statement  can  certainly  be  proven  by  the  course 
of  their  respective  earnings  since  April,  1887,  when  that 
act  took  effect.  I  suhjoin  a  table  taken  from  the  New  York 
Financial  Review  for  1891,  showing  the  gross  earnings  for 
the  last  four  years  inclusive,  of  the  more  prominent  com- 
petitive American  lines : 


Northern  Pacific  Co. 

Gross  Earnings    for  1887....tl3.8U3'20 

"  1888  ...    18,0CO,104 

"  "  "  1889  ...    21,741,891 

"  "  "  1890....   84,40J,091 

Union  Paciflc  Co. 

Gross  Earnings   for  1887....  $28  .557, 766 

'•  1888  ...    30,19-),5-.Jl 

"  "  "  1889....    31,a?0,l82 

"  "  "  1890*...   41.871,813 

N.  Y.  Central  &  H.  R.  R.  R.  Co. 

Gross  Earnings  for  1887.... $36,206,034 

"  1888....    35,:ii83,68: 

•'  1889....   86,066,698 

"  1890....    36  258,641 


Southern  Paciflc  Co. 

Gross  Earnings  for  1887... 838, 773,146 

"              "  "  1888  ...   46.699,614 

"              "  *'  1889....   46,843,208 

"              "  "  I860....   48,243,300 

Pennsylvania  (Lines  East  of  Pittsburg.) 

Gross  Earnings   for  1887....$'*,671,3I3 

"  1888....   68,172,07 

"  "  "  1889....    61,511  n 

"  "  "  1890...   60,3 

Canadian  Pacific  C*" 

Gross  Earnings  for   1887  ...$ll,60o,,..i 

"  "    1888....    18,193,536 

"               "  "    1889....    16,030,660 

"              "  "1890...    16,610,088 


^Increased  mileage  accounts  for  a  part  of  the  large  Earnings  of  1890. 

This  table  shows  that  with  one  exception  the  earnings  of 
the  lines  mentioned,  and  especially  of  the  immediate  rivals 


OB 


of  the   Ciinadian  Pacific  Co.,   have  boon  and  are  steadily 
and  rapidly  increasing. 

I  bog  leave  to  snbinit  the  following  confirmatory  article 
from  The  Railway  Age,  the  leading  railroad  journal  of  this 
country  under  date  of  January  25,  1890,  showing  the  effect 
upon  the  Northern  Pacific  Railway  : 

"  The  Northern  Pacific  Company  at  the  commencement 
of  the  present  year  had  about  3,725  miles  of  completed 
track  owned  and  operated,  and  the  addition  of  the  Wis- 
consin Central  lines  make  up  the  grand  total  of  a  little  over 
4,450  miles,  forming  a  vast  and  far-reaching  system,  now 
extending  from  Lake  Michigan  to  the  Pacific  Ocean,  with 
main  line  and  branches  lying  in  the  States  of  Illinois,  Wis- 
consin, Minnesota,  Dakota,  Washington,  and  Oregon,  and 
the  Territories  of  Montana    and    Idaho.    The  Northern 
Pacific  has,  moreover,  pushed  northward  into  Manitoba, 
•where,  under  the  title  of  the  Northern  Pacific  &  Manitoba 
Railroad,  it  already  has  nearly  200  miles  of  lines  in  opera- 
tion,   with  important  extensions  under  way  and  contem- 
plated.    The  company  will  also  naturally  continue  the  work 
of  opening  up  new  terrttory  along  its  main  lines  by  other 
extensions,  so  that  it  is  evidently  the  question  of  but  a  short 
time  when  the  mileage  of  the  Northern  Pacific  system  will 
have   passed    the    5,000-mile   point,   with  possibilities  of 
almost  indefinite  growth.     Looking  back  only  ten  years, 
when  the  road  consisted  of  only  530  miles  of  bankrupt  line, 
ending  at  the  Missouri  River,  and  contrasting  with  that  the 
vast   mileage  and   prosperous  condition   of   the  company 
to-day,  we  have  an  impressive  example  of  the  changed  con- 
ditions of  this  company  and  of  many  other  railway  proper- 
ties which  have  arisen  within  comparatively  so  short  a  time. 
The  Northern  Pacific  Company  has  fought  its  way  from  the 
depths  of  depression  to  a  commanding  position  among  the 
great    railway  systems  of  the   land,   and  the  remarkable 
increase  in  its  earnings  during  the  last  year,  when  they 


64 


reached  the  grand  total  of  31,763,000  dollara,  gives  its 
owners  reason  to  hope  for  still  better  things." 

The  most  bitter  and  determined  rivals  of  the  Grand 
Trunk  Co.  are  the  Lake  Shore  &  Michigan  Southern  Co. 
and  the  Michigan  Central  Co.  These  two  companies  have, 
in  their  imagination,  been  almost  bankrupted  by  the  com- 
petition of  the  Grand  Trunk  Co.  Poor's  Manual  for  1890, 
however,  tells  quite  a  different  story.  It  shows  that  while 
the  average  annual  gross  earnings  of  the  Lake  Shore  & 
Michigan  Southern  Co.  from  1883  to  1889  inclusive,  were 
$17,082,571;  for  1890  they  reached  the  sum  of  $20,874,200. 
That  the  average  annual  gross  earnings  of  the  Michigan 
Central  Co,  for  the  same  period  were  $12,931,429,  while  for 
1890  they  reached  $14,340,000.  These  figures  do  not  seem 
to  require  any  comment. 

It  lias  been  testified  before  this  committee  that  the  Can- 
adian Pacific  Company  is  "the  alter  ego  of  the  Dominion," 
"  the  Canadian  governmenton  wheels,"  "  that  it  is  dependent 
upon  American  traffic,  without  which  it  could  not  be  suc- 
cessfully operated,"  and  one  very  prominent  witness,  Mr. 
Henry  V.  Poor,  declares  "  that  its  end,  like  that  of  the 
Intercolonial  Railroad  (which  is  owned  and  operated  by  the 
government),  will  be  to  become  a  burden  on  the  Dominion 
treasury  and  create  an  annual  deficit."  The  truth  is  that 
every  one  of  its  obligations  to  the  Dominion  Government 
has  either  been  paid  or  absolutely  provided  for,  so  that  the 
government  is  no  more  financially  interested  in  the  Can- 
adian Pacific  system  to- day  than  is  the  government  of  the 
United  States  in  the  Pennsylvania  system.  The  Canadian 
Pacific  Eailway  is  as  purely  a  commercial  enterprise  as  is 
the  Pennsylvania,  Railway,  and  a  marvelously  successful 
one,  as  shown  by  the  balance  sheet  for  the  year  ending 
December  31st,  1889: 


05 

The  gross  earnings  for  the  year  were $15,030,660  38 

The  working  expenses  were 9,024,601  04 

The  net  earnings  were $6,006,059  34 

Deduct  the  fixed  charges  accruing  during 

the  year 3,779,132  94 

The  surphis  was $2,226,926  40 

Dividend  of  one  per  cent,   paid  February 

17th,  1890 650,000  00 

Leaving  a  surplus  carried  forward. . .  $1,576,926  40 
Surpkis  of  previous  year 326,423  92 

Total  surplus  carried  forward $1,903,350  32 

Of  the  above  gross  earnings  of  $15,030,660.38,  American 
interstate  traffic  furnished  $999,732.23,  or  6.65  per  cent, 
of  the  whole.  Deduct  operating  expenses,  say  66  per  cent., 
and  tiie  net  earnings  dependent  tipon  American  Interstate 
traffic  will  be  seen  to  cut  a  ridiculously  small  figure  in  the 
company's  revenue. 

The   significance  of   these   igures  is   greatly  enhanced 
when  we  remember  that  the  ro;id  was  not  completed  to  the 
Pacific  coast  until  1886,  and  the  short  line  across  the  State 
of  Maine  was  not  completed  until  the  mid-summer  of  1889. 
Another  remarkable  fact  in  view  of  this  balance  sheet  is 
shown  by  the  statistics  of  railways  for  1889,  recently  issued 
by  the  Inter-State  Commerce  Commission.     On  page  21  of 
this  volume  is  a  table  showing  revenue  and  density  of  traffic 
for  all  roads  whose  aimual  gross  revenue  exceeds  $3,000,000, 
in  which  it  appears  that  the  Canadian  Pacific  Railway,  with 
two  exceprions,  earns  the  loioest  gross  revenue  2)er'  mile  of 
line  of  any  of  the  seventy-eight  roads  with  lohieh  it  is  com- 
pared.    Tiie  comparison,  with  the  exceptions,  is  as  follows : 
Canadian  Pacific,  $2,769  ;  Missouri,  Kansas  &  Texas,  $2,704 ; 
Chicago,  Kansas  &  Nebraska,  $1,926. 

How  can  the  Canadian  Pacific  pay  dividends  and  accumu- 


06 

late  a  surplus  from  such  a  small  revenue  ?  Its  operating 
expenses  in  proportion  to  operating  income  is  even  greater 
than  those  of  the  leading  rivals,  as  shown  by  the  same  vol- 
ume of  statistics,  as  follows :  Canadian  Pacific,  65.52  per 
cent.;  Northern  Pacific,  60.37  per  cent;  Union  Pacific, 
56.51  per  cent.  How,  then,  can  the  Canadian  Pacific  pay  divi- 
dends and  accumulate  a  surplus  on  such  a  small  revenue  ? 
Because  it  was  honestly  built  and  is  economically  managed. 
Its  stock  has  not  been  watered ;  no  construction  companies 
are  gnawing  its  vitals,  and  the  profits  on  every  collateral 
enterprise  connected  with  it,  such  as  express,  telegraph,  ele- 
vators, hotels,  restaurants,  sleeping,  dining  and  parlor  cars, 
all  go  into  the  treasury  of  the  company  for  the  henejit  of 
it^  shareholders.  It  presents  in  these  respects  a  great  object 
lesson  to  American  railway  managers. 

The  existence  of  the  Canadian  Pacific  Railroad  is  asserted 
to  be  a  military  menace  to  the  United  States.  On  the  con- 
trary, it  seems  to  me  a  military  weakness  so  far  as  offensive 
operations  against  this  country  are  concerned.  A  line  of 
comnmnication  stretching  along  our  border  fifteen  hundred 
miles,  from  Winnipeg  to  Vancouver,  and  largely  over  open 
prairies,  could  scarcely  be  defended  by  all  the  forces  of  the 
British  Empire.  Gen.  Miles  has  testified  before  this  com- 
mittee that  the  United  States  Government  would  be  able  to 
take  possession  of  this  line  within  ten  days  from  the  outbreak 
of  hostilities. 


Seventh  Reason. — Protection  To  American  Industry. 

This  reason  was  most  plausibly  stated  to  this  Committee 
by  Mr.  A.  N.  Towne,  vice-pres.  of  the  Southern  Pacific 
Raih'oad,  who  insists  that  the  national  policy  is  now  settled, 
and  should  apply  to  railroads  as  well  as  to  other  forms  of 
industry.  I  will  not  discuss  the  logical  strength  of  the 
position,  but  I  strongly  suspect  that  such  an  application  of 
the  doctrine  would  detuch  so  many  Republican  voters  in  the 


67 


northeast,  west  and  northwest  as  to  endanger  the  further 
existence  of  the  policy. 

The  utter  inconsistency  of  Mr.  Towne's  practice  with  his 
theory  cannot  be  better  iUustrated  tlian  to  sliow  the 
measure  of  protection  given  the  American  merchant  and 
manufacturer  by  tiie  Southern  Pacific  Railroad  Co.,  as  per 
the  following  table,  which  is  taken  from  the  findings  in  the 
opinion  of  the  Interstate  Commerce  Commission  recently 
rendered  in  the  case  of  the  New  York  Board  of  Trade  and 
Transportation  et  at.  vs.  I'he  Pennsylvania  R.  R.  Co.  et  al. 
or  the  Import  Rate  case  as  before  referred  to.  I  subjoin 
also  a  portion  of  the  opinion  which  holds  that  such  rates  are 
a  direct  violation  of  the  law. 

"  The  following  table,  compiled  from  data  in  the  office  of 
the  Interstate  Commerce  Commission  in  regard  to  the  tariff 
rates  in  evidence,  shows  through  rates  and  divisions  of 
throngh  rates  for  the  ocean  and  inland  carriage  on  freights 
destined  to  the  Pacific  coast  and  imported  from  Liverpool 
through  the  Port  of  New  Orleans  ;  and  also  freight  rates  on 
domestic  trafiic : 


G8 


Freight  Rates  la  Cents  per  Hundred  Pounds,  to  San  Francisco,  Sacramento,  Marys- 
viUe,  Stockton,  San  Jose,  Oakland  (Sixteenth  Street),  and  Los  Angeles,  Cal. 


COMMODITIES. 


Agricultural  Implements. 

Blacking 

Books  

BoolS  and  Shoes 

Burlaps 

Buttons  

Candles 

Canned  Fish 

Carpets 

Cashmeres 

Cement 

China  ware 

Chocolate 

Cigars    

Clothing  

Confectionery 

Cordage 

Crayons  and  Chalks  

Crockery 

Cutlery 

Drugs,  Common 

Dry  Qoods 

Earthenware 

Feathers 

Glassware,  Common 

Gloves 

Glycerine 

Groceries,  N.O.S 

Hair  Goods 

Hardware 

Hats  and  Caps 

Hosiery 

Lace 

Leather 

Linen 

Linen  Goods 

Milk,  Condensed 

Nails . 


From  Liverpool, 
Eng,  via  New  Or- 
leans. 


Optical  Goods.. 

Pins 

Saddlers'  Goods. 
Soap. 


Soda,  Caustic,  3,480,162  lbs. 

Tallow 

Woolen  Goods 


, 

6 

p  , 

u    . 

ftS 

*§ 

'-•?. 

•s= 

ta 

la 

►H 

19 

70 

19 

70 

27 

80 

27 

80 

19 

70 

27 

80 

19 

70 

19 

70 

27 

80 

27 

80 

19 

70 

27 

80 

27 

80 

27 

80 

'XT 

80 

27 

80 

19 

70 

27 

80 

19 

70 

27 

80 

19 

70 

27 

80 

19 

70 

27 

80 

19 

70 

27 

80 

27 

80 

19 

70 

27 

80 

27 

80 

27 

80 

27 

80 

27 

80 

27 

80 

27 

80 

27 

80 

19 

70 

19 

70 

27 

80 

27 

80 

27 

80  j 

19 

70 

19 

70 

19 

70 

27 

80 

a 
2 


89 

89 
107 
107 

89 
107 

89 

89 
107 
107 

89 
107 
107 
107 
107 
107 

89 
107 

89 
107 

89 
107 

89 
107 

89 
107 
107 

89 
107 
107 
107 
107 
107 
107 
107 
107 

89 

89 
107 
107 
107 

69 

89 

89 
107 


a 
el 
£ 

O 

a 

2 


114 
106 
264 
370 
180 
374 
125 
106 
288 


s 

o 


130 
120 
300 
420 
200 
420 
150 
120 
330 


106 
163 
125 
370 
874 
187 
125 
125 
123 
826 
187 
374 
106 
374 
125 


106 
370 


187 
370 
374 


120 
190 
150 
420 
420 
215 
215 
150 
ISO 
370 
215 
420 
120 
420 
150 


120 
420 


215 
420 
430 


826  j  370 


106 
106 


120 
120 


264 
370 
106 
106 
106 


a 


119 
110 
275 
390 
185 
390 
130 

no 

300 


110 
170 
130 
390 
390 
195 
130 
130 
130 
340 
196 
390 
110 
390 
130 


no 

390 


195 
390 
890 


340 


110 
110 


300  275 

420  890 

120  no 

120  no 

120  no 


"  The  road's  import  traffic  is  increasin^r  and  has  ahout 
doubled,  comparing  1885  witli  1889.  All  tliis  traffic 
went  by  sailings  vessels  and  steamship  lines  via  Panama 
until  the  Southern  Pacific  Company  opened  the  New 
Orleans  line.  The  claim  of  the  company  now  is  that  not 
one-tenth  of  it  is  carried  by  its  line,  and  that  without  the 
reduced  through  rate  and  the  through  line  the  road  would 
get  none  of  it." 


60 


"  So  far  as  Europe  is  concerned  the  Southern  Pacific  Com- 
pany does  not  regard  tlie  Canada  lines  as  being  serious  com- 
petitors with  it.  Tiie  Northern  Pacific  Raih-oad  Company 
carries  little,  if  any,  of  this  particular  traffic.  The  nine- 
tenths  of  the  traffic  not  carried  by  the  Southern  Pacific 
Company,  it  is  estimated,  is  carried  by  sailing  vessels  via 
Cape  Horn  and  steamships  via  Panama.  " 

"■  These  circumstances  and  conditions  are  indeed  svldely 
different  in  many  respects  from  the  circumstances  and  con- 
ditions surrounding  the  carriage  of  domestic  interstate  traffic 
between  the  States  of  the  American  Union  by  rail  carriers ; 
but  as  the  regulation  provided  for  by  the  Act  to  Ilegulate 
Commerce  does  not  undertake  to  regulate  or  govern  them, 
they  cannot  be  held  to  constitute  reasons  in  themselves  why 
imported  freight  brought  to  a  port  of  entry  of  the  United 
States  or  a  port  of  entry  of  an  adjacent  foreign  country 
destined  to  a  place  within  the  United  States  should  be  car- 
ried at  a  lower  rate  than  domestic  traffic  from  such  ports  of 
entry  respectively  to  the  places  of  destination  in  the  United 
States  over  the  same  line  and  in  the  same  direction.  To 
hold  otherwise  would  be  for  the  Commission  to  create  excep- 
tions to  the  operation  of  the  statute  not  found  in  the  stat- 
ute ;  and  no  other  power  but  Congress  can  create  such 
exceptions  in  the  exercise  of  legislative  authority." 

"  One  paramount  purpose  of  the  Act  to  Regulate  Com- 
merce, manifest  in  all  its  provisions,  is  to  give  to  all  dealers 
and  shippers  the  same  rates  for  similar  services  rendered 
by  the  carrier  in  transporting  similar  freight  over  its  line. 
Now,  it  is  apparent  from  evidence  in  this  case  that  many 
American    manufacturers,  dealers  and  localities,  in  almost 
every  line  of  manufacture  and  business,  are  the  competitors 
of  foreign  manufacturers,  dealers  and  localities,  for  supply- 
ing the  wants  of  the  American  consumers  at  interior  places 
in  the  United  States,  and  that  under  domestic  bills  of  lading 
they  seek  to  require  from  American  carriers  like  service  as 
their  foreign  competitors  in  order  to  place  their  manufac- 
tured goods,  property  and  merchandise  with  interior  con- 
sumers.    The  Act  to  Regulate  Commerce  secures  them  this 
right.     To  deprive  them  of  it  by  any  course  of  transporta- 
tion business  or  device  is  to  violate  the  Statute.     Such  a 
deprivation  would  be  so  obviously  unjust  as  to  shock  the 
general  sense  of  justice  of  all  the   people   of  the   country 
except   the  few  "  who    would    receive   the    immediate    and 
direct  benefit  of  it." 

An  examination  of  the  long  list  of  articles  in  this  table 


70 


shows  the  freight  on  all  of  them  with  a  single  exception  to 
be  greater  from  New  Orleans  to  San  Francisco,  than  from 
Liverpool  to  San  Francisco  via  New  Orleans.  Tiie  excep- 
tion is  glycerine,  which  pays  107  cents  per  100  lbs.  from  Liv- 
erpool to  San  Francisco,  and  lOG  cents  per  100  lbs,  from  New 
Orleans  to  San  Francisco.  Upon  the  English  shipment  of 
this  article  the  Sonthern  Pacific  Railroad  (the  balance  going 
to  the  foreign  steamship)  receives  70  cents  per  100  lbs. 
while  upon  the  American  shipment,  the  service  being  pre- 
cisely the  same  in  both  cases,  it  receives  106  cents  per  100 
lbs.,  in  other  words,  this  patriotic  Railroad  company  charges 
its  American  putrons  Jlfti/-o?ie  per  cent,  more  than  it  does  its 
English  patrons.  Upon  all  other  articles  the  discrimination 
is  still  greater,  requiring  in  the  shipment  of  groceries,  N.  O. 
S.  (not  otherwise  specified),  4^^S  per  cent,  more  freigld 
money  from  the  American  than  from  the  English  shippers. 
This  vociferous  advocate  of  protection  against  the  competi- 
tion of  foreign  railways,  thus  favors  English  at  the  expense 
of  American  interests. 

I  respectfnll}'  submit,  therefore,  that  none  of  the  seven 
alleged  reasons  for  further  legislative  control  of  the  Cana- 
dian railroads  have  any  foundation  in  fact,  and  unless 
some  better  ones  can  be  adduced,  that  the  Congress  of  the 
United  States  ought  not  to  be  placed  in  the  position  of  a 
quasi  side  partner  with  any  set  of  railroad  corporations,  in 
their  purel}'  business  struggles  with  others  for  an  increased 
traflie. 

It  should  be  borne  in  mind  that  no  official  of  the  Cana- 
dian railroads  lias  evei-  claimed  exemption  from  the  Inter- 
State  Commerce  act  of  any  traffic  carried  in  connection  with 
an  Auierican  railroad,  but  on  the  contrary  the  General  Man- 
ager of  the  Grand  Trunk  Compan  Sir  Joseph  Hickson,  and 
the  President  of  the  Canadian  Pacific  Company,  Mr.  W.  C. 
Van  Ilorne,  both  swore  at  the  hearing  in  New  York,  in 
May,  1889,  that  they  consider  "that  all  traffic  going  over  their 


71 


lines  in  wliicli  American  railroads  participated,  is  subject 
to  the  Inter-State  Commerce  Act  in  all  respects,  and  further 
that  their  tariffs  covering  such  traffic  were  all  on  file  with 
the  Interstate  Commerce  Commission  as  required  by  law, 
and  were  accessible  for  examination  by  anyone." 

The  Interstate  Commerce  Commission  have  lield  in  the 
only  two  cases  before  it,  in  which  the  question  of  jurisdic- 
tion over  Canadian  railroads  could  be  raised,  that  any  traffic 
moving  over  a  single  foot  of  American  territory,  even 
though  never  out  of  the  possession  and  control  of  the  Cana- 
dian carrier  and  non-competitive  with  any  American  carrier, 
is  nevertheless  subject  to  the  act.  The  Commission  has  thus 
asserted  its  jurisdiction  over  the  carriage  of  coal  from 
Buffalo  to  Canada,  and  over  the  carriage  of  Asiatic  products 
from  Yokohama  via  Vancouver  to  the  United  States,  and 
to  Canada,  if  touching  American  territory  en  route. 

Thus   far  the  Canadian   railroads   have  cheerfully   and 
promptly  conformed  to  every  suggestion  and  requirement 
of  the  Commission  and  until  they  refuse  onjurisdictio7ial 
groimds  to  be  bound  by  the  rules  to  which  their  American 
rivals  submit,  there  can  be  no  necessity  for  legislative  action 
against  tliem.     The  feeling  in  American  commercial  circles 
adverse  to  congressional  action  which  would  unnecessarily 
cripple  the  competitionof  Canadian  with  American  railroads 
cannot  be  better  expressed  than  in  the  reply  to  an  interroga- 
tory propounded  to  the  Chicago  Board  of  T'-ade  by  the 
Senate  Committee  on  Interstate  Commerce,  in  J  uly,  1889. 
The  interrogatory  was :    "Do  you  consider  any  additional 
legislation   expedient  or  desirable  for  the  regulation  of  the 
commerce  carried  on  by  railroad  or  water  routes  between 
the  United  States  and  Canada  ?"     The  reply  was :  *'  We  do 
not    consider    any  additional   legislation   necessary.      The 
adoption  of  any  legislative  measures  calculated  to  restrict 
the  transportation  facilities  now  enjoyed   by  the  farmers, 
<!otton  growers  and  cattle  raisers  of  the  west  and  southwest, 


72 

would,  in  the  opinion  of  this  oommittee,  hury  in  impenetra- 
hie  ohlimon,  the  political  party  that  aGcomplished  it.  The 
west  would  act  as  one  man,  and  be  aided  and  abetted  by  the 
independent  voter  of  New  England  in  the  furtherance  of 
sucli  desirable  obsequies." 

I  desire  to  say  in  passing  that  no  complaint  under  the 
penal  secaon  of  the  act  has  ever  been  lodged  against  the 
Canadian  railroads. 

If  my  statements  of  fact  and  conclusions  therefrom  are 
well  founded,  there  is  no  need  to  discuss  at  any  length  the 
questions  of  international  jurisdiction  and  comity  wluch 
must  be  involved  in  any  attempt  to  control  by  Congressional 
action  the  purely  local  interstation  traffic  of  Canada  lying 
between  points  past  which  American  bonded  traffic  is  car- 
ried. P>en  if  the  jurisdictional  objection  should  be  waived 
by  our  Canadian  neighbors,  which  is  quite  improbable,  the 
configuration  of  Canadian  territory  is  snch,  that  a  general 
application  to  its  purely  local  traffic  of  the  long  and  short 
haul  clause  of  our  law  would  be  fraught  with  marked  injus- 
tice. For  example,  the  Canadian  interstation  traffic  lying 
between  Sault  Ste.  Marie,  Port  Huron,  and  Detroit  on  the 
west,  and  the  St  Lawrence  and  Niagara  frontiers  of  the  State 
of  New  York  on  the  east,  could  not  be  expected  to  submit 
to  restrictions  from  which  the  entire  interstation  traffic  of 
the  great  States  of  New  York,  Pennsylvania,  Illinois,  and 
every  other  State  is  exempted  by  the  very  terms  of  the 
Interstate  Commerce  Act,  which  reads  as  follows  : 

"  Provided,  however,  That  the  provisions  of  this  act 
shall  not  apply  to  the  transportation  of  passengers  or  prop- 
erty wholly  within  one  State  and  not  shipped  to  or  froiri  a 
foreign  country  from  or  to  any  State  or  Territory  as  afore- 
said.'' 

I  will  close  these  necessarily  somewhat  desultory  remarks,, 
with  the  consideration  of  one  more  statement  made  to  this 
Committee  by  a  prominent  witness  be  fore  referred  to,  which 


78 

also  the  Interstate  Commerce  Commission  have  hastily 
indorsed.  A  very  slight  examination  of  the  matter  will 
demonstrate,  beyond  all  controversy,  the  error  into  which 
both  have  fallen.  I  quote  from  page  897  of  the  testimony 
already  printed  by  this  Committee  : 

"  How  the  Dominion  Oovernment  by  Statutory  Enactment  Aids  tlie  Cana- 
dian Railroads  in  Competing  with  the  Railroads  of  the  United  States. 

"  While  the  Interstate  Commerce  Act  of  the  United  States 
operates  as  a  restraint  upon  our  railroads  in  their  attempt 
to  meet  the  competition  of  Canadian  lines,  the  laws  of 
Canada  by  special  statutory  exemption  aid  the  railroads  of 
that  country  in  their  persistent  efforts  to  encroach  upon 
American  railroads.  This  fact  is  clearly  set  forth  by  the 
Interstate  Commerce  Commission  in  its  recently  published 
third  annual  report.  Referring  to  the  Canadian  raih'oads 
the  Commission  says : 

''  They  are  practically  under  no  restrictions  imposed  by 
their  own  statutes  in  respect  to  long  and  short  haul  traffic, 
but  are  at  liberty  to  charge  iiigh  rates  on  local  business,  to 
idemnify  for  losses  on  through  or  international  business. 
Their  managers  deny  witli  more  or  less  emphasis  that  their 
local  traffic  is  subjected  to  higher  rates,  but  wlien  the 
liberty  to  make  such  charges  and  the  necessity  for  it 
co-exists,  the  inducement  at  least  is  strong.  The  provisions 
of  the  Canadian  statute  on  this  subject  arc  as  follows: 

"  Sec.  226.  The  company,  in  fixing  or  regulating  the  tolls 
to  be  demanded  and  taken  for  the  transportation  of  goods 
shall,  except  in  respect  to  through  traffic  to  or  fi'om  the 
United  States,  adopt  and  conform  to  any  uniform  classifi- 
cation of  freight  which  the  governor  in  council,  on  the 
report  of  the  minister,  from  time  to  time  prescribes. 

"Sec.  232.  Xo  company,  in  fixing  any  toll  or  rate,  shall, 
under  like  conditions  and  circumstances,  make  any  unjust 
or  partial  discrimination  between  different  localities  ;  but 
no  discrimination  between  localities,  which  by  reason  of 
competition  by  water  or  railway,  it  is  necessary  to  make  to 
secure  traffic,  shall  be  deemed  to  be  unjust  or  partial," 

"These  enactments  give  all  traffic  carried  in  competition 
with  our  carriers  unlimited  freedom." 

"Mr.  Chairman,  these  statutory  provisions  of  the  Domin- 
ion Government  are  part  and  parcel  of  a  general  line  of 
political  encroachment  upon  American  interests." 


74 


T 


Tlie  Railway- 
Committee. 


What  matters 
Railway  Com- 
mittee may 
hear  and  deter- 
mine. 


Powers  of  in- 
quiry, etc. 


Compelling  at 
tendance  of 
witnesses,  etc. 


I  beg  leave  in  this  connection  to  Bubmit  the  following 
sections  from  the  Canadian  Railway  Act  of  1888  : 

Seo.  8.  The  Railway  Committee  of  the  Privy  Council 
shall  consist  of  the  Minister  of  Railways  and  Canals,  who 
shall  bo  chairman  thereof ;  of  the  Minister  of  Justice,  and 
of  two  or  moi'e  of  the  other  members  of  the  Queen's  Privy 
Council  for  Canada,  to  be  from  time  to  time  appointed  by 
the  Govei'nor  in  Council,  three  of  whom  shall  form  a 
quorum ;  and  such  committee  shall  have  the  powers  and 
perform  the  duties  assigned  to  it  by  this  act. 

Sec  11.  "  The  Railway  Committe  shall  have  power  to 
inquire  into,  hear  and  determine  any  application,  complaint 
or  dispute  respecting  (among  other  things) : 

{a)  Unjust  ])reference8,  discrimination  or  extortion; 

(h)  Any  matter,  act  or  thing  which,  by  this  or  the  special 
act  is  sanctioned,  required  to  be  done  or  prohibited. 

Sec  13.  The  Railway  Committee,  the  Minister,  inspect- 
ing engineei",  commissioner  for  inquiry  into  accident  or 
casualty,  or  person  appointed  to  make  inquiry  or  report, 
ma}',  among  other  things  : 

(a)  Require  the  attendance  of  all  such  persons  as  it  or  he 
thinks  lit  to  call  before  it  or  him  and  examine  and  require 
answei's  or  returns  to  such  inquiries  as  it  or  he  thinks  fit  to 
make. 

{b)  Requii-e  the  pi'oduction  of  all  books,  papers,  plans, 
specifications,  di'awings  and  documents  relating  to  the  mat- 
ter before  him. 

Sec  15,  The  Railway  Committee,  the  Minister  and  every 
such  engineei',  commissioner  or  person  shall  have  the  same 
power  to  enforce  the  attendance  of  witnesses  and  to  compel 
them  to  give  evidence  and  produce  the  books,  papers  or 
things,  which  they  are  required  to  produce,  as  is  vested  in 
any  court  in  civil  cases. 

Se:c  17.  Any  decision  or  order  made  by  the  Railway 
committee   under  this  act  may  be  made  an  order  of  the 


75 

Exchequer  court  of  Canada,  or  of  any  Superior  court  of  any 
province  of  Canada,  and  shall  he  enforced  hi  like  manner  as 
any  rule  of  such  court. 

Sec.  214.  The  company  may,  subject  to  the  provisions  company^may 
and  restrictions  in  this  and  in  the  special  act  contained,  make  J,"'",^'^**"  p"'- 
by-laws,  rules  or  regulations  for  the   following   purposes, 

*     4*     *     *     (various  matters). 

Sec.  217.  All  such  by-laws,  rules  and  rej^ulations  shall  be  s^onction  of  by- 
submitted  from  time  to  time  to  the  Governor  in  Council  for 
approval,  and  no  such  by-law,  rule  or  regulation  shall  have 
any  force  or  effect  until  it  is  approved  by  the  Governor  in 

Council. 

Sec.  223.  Subject  to  the  provisions  and  restrictions  in  ^o^'^- Z^**^ 
this  and  in  the  special  act  contained,  the  company  may,  by 
by-laws,  or  the  directors  if  thereunto  authorized  by  the  by- 
laws may,  from  time  to  time  fix  and  regulate  the  tolls  to  be 
demanded  and  taken  for  all  passengers  and  goods  trans- 
ported upon  the  railway  or  in  steam  vessels  belonging  to  the 
company. 

Sec.  224.  Such  tolls  may  be  fixed  either  for  the  whole  or  N°„t,te"'""'" 
for  any  particular  portions  of  the  railway  ;  but  all  such  tolls  °"'^«- 
shall  always  under  the  same  circumstances,  be  charged 
equally  to  all  persons,  and  at  the  same  rate,  whether  per  ton, 
per  mile  or  otherwise,  in  respect  of  all  passengers  and  goods 
and  railway  carriages  of  the  same  description,  and  conveyed 
or  propelled  by  a  like  railway  carriage  or  engine,  passing 
only  over  the  same  portion  of  the  line  of  railway  ;  and  no 
reduction  or  advance  in  any  such  tolls  shall  he  made  either 
directly  or  indirectly,  in  favor  of  or  against  any  particular 
company  or  person  traveling  upon  or  using  the  railway. 

Sec.  225.  Tiie  tolls  fixed  for  large  quantities  or  long  dis- Special  rates, 
tances  may  be  proportionately  less  than  the  tolls  fixed  for 
small  quantities  or  short  distances,  if  such  tolls  are,  under 
the  same  circumstances  charged  equally  to  all  persons  ;  but 
in  respect  of  quantity  no  special  toll  or  rate  shall  be  given 


76 


ClaBHlflcatiun 
of  f  relKiit. 


Tolls  to  be  ap- 
proved by  Gov 
ernor  in  Couu- 
cil. 


Revision  of  by- 
law fixing  tolls, 


Tariflfs  to  be 
posted  up. 


Discriminatiou 
when  allow- 
able. 


No  secret 
special  rates 
to  be  given. 


or  fixed  for  any  quantity  less  than  one  car  load  of  at  least 
ton  tons. 

Sko.  226.  The  company  in  fi,\in<?  or  rognlatiiig  the  tolls 
to  bo  denianded  and  taken  for  the  transportation  of  goods, 
shall,  except  in  respect  to  through  traffic  to  or  from  the 
United  States,  ado2)t  and  conform  to  any  uniform  classifi- 
cation of  freight  which  the  Governor  in  Council  on  the 
report  of  the  minister  from  time  to  time,  presorihes. 

Sec.  227.  No  tolls  shall  be  levied  or  taken  until  the  by- 
law fixing  such  tolls  has  been  approved  of  by  the  Governor 
in  Council,  nor  until  after  two  weekly  publications  in  the 
Canada  Gazette  of  such  by-law  and  of  the  order  in  council 
approving  thereof ;  nor  shall  any  company  levy  or  collect 
any  money  for  services  as  a  common  carrier  except  subject 
to  the  provisions  of  this  act. 

Sec.  228.  Every  by-law  fixing  and  regulating  tolls  shall 
be  subject  to  revision  by  the  Governor  in  Council,  from 
time  to  time,  after  approval  thereof. 

Sec.  230.  The  company  shall  from  time  to  time  cause  to 
be  printed  and  posted  up  in  its  oflices,  and  in  every  place 
whore  the  tolls  are  to  be  collected,  in  some  conspicuous 
position,  a  printed  board  or  paper  exhibiting  all  the  rates 
of  tolls  payable,  and  particularizing  the  price  or  sum  of 
money  to  be  charged  or  taken  for  the  carriage  of  any  matter 
or  thing. 

Sec.  232.  No  company,  in  fixing  any  toll  or  rate,  shall, 
under  the  conditions  and  circumstances,  make  any  unjust  or 
partial  discrimination  between  different  localities  ;  but  no 
discrimination  between  localities  which,  by  reason  of  com- 
petition by  water  or  railway,  it  is  necessary  to  make  to 
secure  traffic,  shall  be  deemed  unjust  or  partial. 

Sec.  233.  No  company  shall  make  or  give  any  secret 
special  toll,  rate,  rebate,  drawback  or  concession,  to  any 
person  ;  and  every  company  shall,  on  the  demand  of  any 


77 


person,  mako  known  to  him  any  special  rate,  rebate,  draw- 
back or  concession,  given  to  any  one. 

Skc.  2-iO.  Every   company   shall,  according  to  its  power, 
afford  all  reasonable  facilities  to  any  other  railway  company 
for  the  receiving  and    forwarding  and  delivery  of  traffic 
npon  and  from  the  several  railways  belonging  to  or  worked 
by   such   companies   respectively,    and   for   the  return  of 
carriages,  trucks  and  other   vehicles  ;  and  no  such  company 
shall  make  or  give  any  undue  or  unreasonable  preference  or 
advantage  to  or  in  favor  of   any  particular  person  or  com- 
pany, or  any  particular  description  of  trafHc  in  any  respect 
whatsoever, — nor  shall  any  such  company  subject  any  par- 
ticular person  or  company,  or  any  particular  description  of 
traffic  to  any  undue  or  tinreasonable    prejudice  or  disadvan- 
tage  in  any  respect  whatsoever  ;  and  every  company  which 
has  or  works  a  railway  which  forms  part  of  a  continuous 
line  of  railway,  or  which   intersects  any  other  railway,    or 
which  has  any  terminus,    station  or  wharf  near  to  any  ter- 
minus, station  or  wharf  of  any  other  railway,  shall  afford 
all  due  and  reasonable  facilities  for  receiving  and  forward- 
ing by  its  railway  all  the  traffic  arriving  by  such  other  rail- 
way, without  any  unreasonable  delay,  and  without  any  such 
preference  or  advantage  or  prejudice  or  disadvantage,  as 
aforesaid,  and  so  that  no  obstruction  is  offered  to  the  public 
desirous  of  using  such   railway  as  a  continuous  line  of  com- 
munication, and  so  that  all   reasonable  accommodation,  by 
means  of  the  railways  of   the  several  companies,  is  at  all 
times  afforded  to  the  public  in  that  behalf  ;  and  any  agree- 
ment made  between  any  two  or  more  companies  contrary 
to  this  section  shall  be  unlawful  and  null  and  void. 

Sec.  241.  Every  officer,  servant  or  agent  of  any  company, 
having  the  superintendence  of  the  traffic  at  any  station  or 
depot  thereof,  who  refuses  or  neglects  to  receive,  convey  or 
deliver  at  any  station  or  depot  of  the  company  for  which 
they  are  destined,  any  passenger,  goods  or  thing,  brought, 


Faollitiea  to  be 
afforded  in  re- 
spect to  traftlfl. 


No  undue  ad- 
vantage. 


Agreements  in 
violation  to  be 
void. 


Penalty  for  re- 
fusal to  receive 
and  convey 
goods. 


78 


Recovery  and 
application. 


Equal  facilities 
toexpressco.'s, 
etc. 


Liability  of 
company,  etc., 
in  cases  speci- 
fied. 


Penalty. 


Damages  for 
extortionate 
tolls. 


conveyed  or  delivered  to  him  or  such  company  for  convey- 
ance over  or  along  its  railway  from  that  of  any  other  com- 
pany, intersecting  or  being  near  tosnch  first  mentioned  rail- 
w,y,  or  who  in  any  way  willfully  violates  the  provisions  of 
ihe  next  preceding  section,  and  the  company  first  mentioned, 
are,  for  each  refusal,  neglect  or  offense  severally  liable  in 
summary  conviction,  to  a  penalty  not  exceeding  fifty  dol- 
lars over  and  above  the  actual  damages  sustained ;  which 
penalty  shall  be  recoverable  with  costs,  by  the  railway  com- 
pany or  by  any  such  person  aggrieved  by  such  neglect  or 
refusal,  and  such  penalty  shall  belong  to  the  said  railway 
company,  or  other  person  so  aggrieved. 

Sec.  242,  Every  company  which  grants  any  facilities  to 
any  incorporated  express  company  or  person  shall  grant 
equal  facilities  on  equal  terms  and  conditions  to  any  other 
incorporated  express  company  wliich  demands  the  same. 

Sec.  289.  Every  company,  director  or  officer  doing,  caus- 
ing or  permitting  to  be  done  any  matter,  act  or  thing  con- 
trary to  the  provisions  of  this  or  the  special  act,  or  to  the 
orders  or  directions  of  the  Governor  in  Council,  or  of  the 
railway  committee,  oi  minister  made  hereunder,  or  omitting 
to  do  any  matter,  act  or  thing,  required  to  be  done  on  the 
part  of  any  such  company,  director  or  officer,  is  liable  to 
any  person  injured  thereby  for  the  full  amount  of  damages 
sustained  by  such  act  or  omission  ;  and  if  no  other  penalty 
is  in  this  or  the  special  act  provided  for  any  such  act  or 
omission,  is  liable  for  each  offense,  to  a  penalty  of  not  less 
than  twenty  dollars,  and  not  more  than  five  thousand  dol- 
lars, in  the  discretion  of  the  court  before  wliich  the  same 
is  recoverable. 

Sec.  2.  This  section  shall  only  apply  to  companies  and 
directors  and  officers  of  companies  within  the  legislative 
authority  of  the  parliament  of  Canada. 

Sec.  290.  Every  person  from  whom  any  company  exacts 
any  unjust  or  extortionate  toll,  rate  or  charge  shall,  in  addi- 


79 


tioii  to  the  amount  so  unjustly  exacted,  be  entitled  to 
recover  from  the  company  as  damages  an  amount  equal  to 
three  times  the  amoimt  so  unjustly  exacted. 

A  careful  examination  of  these  provisions  of  the  Cana- 
dian Railroad  Act,  some  of  them,  notably  section  2J:0,  being 
almost  identical  in  terms  with  our  own,  discloses  that  Cana- 
dian railroads  are  substantially  as  closely  restricted  by  law 
in  their  dealings  with  Canadian  merchants  and  shippers  as 
are  our  own  in  dealing  with  American  merchants  and  ship- 
pers. In  one  respect  at  least  their  system  is  superior  to  our 
own,  in  that  the  orders  of  their  tribunal,  the  Railway  Com- 
mittee, are  given  the  force  of  orders  of  court,  while  our  tri- 
bunal, the  Interstate  Commerce  Commission,  has  no  legal 
power  to  enforce  its  decrees.  It  is  therefore  idle  to  suppose 
that  Canadian  railroads,  with  such  prompt  and  efficient 
remedies  in  the  hands  of  their  patrons,  can  long  subject  them 
to  unjust  charges  as  compared  with  those  placed  upon  inter- 
national traffic. 

The  charges  imposed  upon  any  article  of  freight  carried 
by  any  railroad,  whether  American  or  Canadian,  depends 
upon  the  class  of  articles  to  which  it  belongs.  Freight  gen- 
erally, is  divided  on  most  American  roads  into  ten  classes. 
This  basis  of  division  is  not  however,  universally  observed. 
In  some  sections  of  our  country  a  larger  number  of  classes 
are  used,  in  others  a  smaller  number.  Even  where  tlie  same 
iiumher  of  classes  are  used,  it  not  unfrequently  happens  that 
an  article  rated  as  5th  class  in  one  section  of  our  country, 
may  for  illustration,  be  rated  in  another  section  as  3d  class 
or  7th  class.  This  has  given  rise  to  various  systems  of 
classification,  known  as  the  Trunk  Line  Classification,  Mid- 
dle States  Classification,  West<Tu  States  Classification  and 
Southern  Railway  and  Steamship  Classification. 

It  will  be  noted  that  the  Canadian  roads  are  by  law 
obliged  to  submit  their  local  classification  to  the  Governor 
la   Council  for  approval,   hence   this  classification   which 


80 


differs  in  mme  respects  from  any  used  by  American  roads, 
i»  known  among  railroad  men  as  the  Canadian  Official  Class- 
ifieation."  I't  is  evident  that  if  Canadian  railroads  partici- 
pate in  the  carriage  of  American  traffic  they  must  also  par- 
ticipate in  tlie  classification  under  which  that  traffic  is  car- 
ried. In  order,  therefore,  to  enable  tiiem  to  conform  to  the 
classitieations  of  their  American  connections,  and  at  the 
same  time  avoid  a  violation  of  Canadian  law,  section  226 
provides  that  "  through  traffic  to  or  from  the  United  States'' 
may  be  excepted  from  the  official  classification  which  the 
Governor  in  Council  from  time  to  time  prescribes.  Instead 
then  of  section  226  being  a  menace  to  American  traffic,  or 
American  railroads,  it  is  a  voluntari/  concession  to  both. 

In  section  232,  the  "localities"  between  which  discrim- 
ination may  under  certain  circumstances  be  exercised,  are 
assuredly  only  those  over  which  Canadian  jurisdiction 
extends,  and  therefore  cannot  be  "  localities  "  in  the  United 
States,  and  the  wildest  stretch  of  imagination  cannot  torture 
the  clause  into  meaning  a  privilege  of  discrimination 
between  a  "  locality  "  in  Canada  and  a  "  locality  "  in  the 
United  States.  The  traffic  affected  by  this  section  being 
then  local  Canadian  traffic  which  perforce  cannot  be  carried 
by  American  carriers,  and  therefore  cannot  be  carried  in 
competition  with  them  ;  there  can  be  no  justilication  for  the 
statement  above  quoted,  "  these  eiuictments  give  all  traffic 
carried  in  competition  with  our  carriers  unlimited  freedom." 
Besides  it  has  been  held  by  the  Interstate  Commerce  Com- 
mission that  an  American  railroad  "  competing  Avith 
water  or  with  a  foreign  railway  for  traffic  important  in 
amount  and  controlling  in  effect,  may  be  relieved  from  the 
long  and  short  haul  clause  of  the  act.'"  The  Commission 
has  further  held  that  Triterstate  traffic  between  two  points, 
competitive  with  local  State  traffic  between  the  same  two 
points,  may  also  be  relieved  from  the  long  and  short  haul 
clause  of  the  act.  This  is  a  complete  acknowledgment  of 
the  soundness  of  the  principle  of  the  Canadian  law,  and 
should  forever  stop  any  further  denunciation  of  it,  as  a 
menace  to  the  United  States. 


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